Even though the head honcho Jamie Dimon seemed really derisive of cryptocurrencies, and by proxy blockchain, just a few years ago, J.P. Morgan Chase is now acting assertively to move quickly in this fintech space.
J.P. Morgan already issued its own cryptocurrency late last year, to much fanfare and confusion, and now new announcements show that the company is poised to increase its use of blockchain through its Interbank Information Network that links hundreds of banks around the world in order to help handle global payments.
“John Hunter, JPM’s head of global clearing, said it has built a new feature that can instantly verify whether a payment is heading to a valid bank account,” writes Thomas Simms at Cointelegraph this morning. “At present, transactions can be rejected days after they were sent because of typos in sort codes, account numbers and addresses.”
According to reporting J.P. Morgan expects the functionality to be live by this fall.
Launched in 2017, the Interbank Information Network was built to minimize friction in global payments.
“IIN will enhance the client experience, decreasing the amount of time – from weeks to hours – and costs associated with resolving payment delays,” said Emma Loftus, Head of Global Payments and FX, in a press statement at the time. “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”
At the time, and now as J.P. Morgan gets ready to expand blockchain functionality, critics are pointing out that all of this innovation goes against past remarks by Jamie Dimon. Writing in February at Institutional Investor, Alicia McElhaney cites Dimon’s opinion in 2017 that Bitcoin was “worse than tulip bulbs” and that crypto currencies lacked the characteristics of real, valuable assets.
Though many find it hard to square today’s J.P. Morgan decisions with Dimon’s scoffing, it’s important to note that the company’s use of blockchain doesn’t really resemble what investors do with Bitcoin when they want to profit from increasing value. Instead, like many other institutions today, J.P. Morgan is primarily using its coin and its network not as a value investment, but as a functional way to control fiat payments. In other words, it’s a medium more than it is an asset.
This makes all the sense in the world when you look at it from the context of the general fintech industry. More institutions are climbing on board utilizing blockchain as a medium – for transactions, for tracking, for business processes, and for government efficiency. They’re not necessarily buying into the idea that you buy-and-hold Bitcoin to try to get capital gains. Instead, they are using the underlying technology to enhance business.
That said, investors see this blockchain adoption as driving higher cryptocurrency values in the future. Keep an eye on how this works if you are involved in the cryptocurrency market.