JPMorgan tests blockchain for dollar transfers; strikes Starbucks deal
23 February 2016 | 14385 views | 0
JPMorgan Chase is testing the use of distributed ledger technology to move US dollars between London and Tokyo, working with about 2200 clients on the trial ahead of possible live transactions later in the year.
The US banking giant is hoping that using blockchain tech for currency clearing and settlement will speed up the process for clients and reduce its risk, according to the Wall Street Journal.
Although CEO Jamie Dimon has poured scorn on Bitcoin, his bank has been enthusiastically exploring the cryptocurrency's underlying technology. The firm is part of the R3 consortium and has invested in Digital Asset Holdings - the startup helmed by its former head of commodities Blythe Masters. The pair are already testing blockchain technology for loan trading operations.
News of the latest experiment comes as JPMorgan affirms its commitment to technology on its annual investor day. During a time of cost cutting, the bank's tech budget for the year is rising from $9.2 billion to $9.4 billion, about a third of which is earmarked for investments.
The company has more than 40,000 technologists on its payroll, including 18,000 developers creating intellectual property, many of them now based at 13 special technology hubs around the world.
In addition, it is touting its engagement with the fintech community, claiming to have worked with more than 300 early stage firms, making around 30 investments over the last two years and piloting over 100 technology solutions in just 12 months.
The bank has made the transition to digital a strategic priority, which appears to be bearing fruit. Mobile user numbers have doubled since 2012 while teller transactions are down by 100 million, a trend likely to continue thanks to the rollout of new ATMs which should be able to carry out 90% of the functions carried out by tellers by the end of 2017.
The switch in consumer behaviour has enabled a 12,000 reduction in transactional staff headcount in the last three years while branch numbers fell by 189 to 5413 in 2015. Another 150 are slated to go in 2016.
On payments, the bank is betting on its partnership with retailer consortium MCX for Chase Pay, its new digital wallet leading the fight back against tech giants Apple, Google and Samsung in the increasingly crowded mobile money arena.
A new deal sees Chase Pay enabled for use at 7500 Starbucks locations across the US. Meanwhile, Chase Pay can also be used to reload a Starbucks card within the coffee giant's own app. Chase recently took on the role of Starbucks' processor from Square, which found its deal a massive loss maker.