Author: Andrea Casetta
Banks are rushing to the development of Blockchain-based infrastructure. One is testing its coin already.
If you are among our readers, you already know that Blockchain could have the potential to disrupt every industry. That is why it is a hot topic among bankers too, although it receives little exposure outside of their high-rises. Such technology could have a tremendous impact on how banks run their business. Indeed, as pointed out by Accenture in their “Banking on Blockchain” paper, its implementation would make (intra and extra) payments much quicker and more accurate, while also reducing operational costs. Moreover, nine out of ten executives declared that their bank is currently exploring the use of blockchain in their daily activities. However, as a negative implication, the investment necessary to build and operate a network is massive.
One of the banks moving faster in this regard is J.P. Morgan, which is testing its cryptocurrency already named “JPM Coin”. The peculiarity of this coin is that of being a Stablecoin, meaning that it was designed to minimize its volatility. This allows the Bank and its clients to use it for intra-payments (B2B). Its value will always be 1 USD and, when transferred between clients would be instantaneously converted in the equivalent amount of dollars. So, what is the benefit, many would ask? From the perspective of J.P. Morgan's clients, the Coin will ensure complete transparency over money transfers, while also reducing the costs involved in their validations. It will drastically reduce the time needed to process payments, meeting the increasing demand for clients for fast and cost-effective transactions. Adding to this, the Stablecoin will also reduce fees: Ripple-based transactions cost $0.003, compared to the traditional cost that ranges between 2% to 10%. From an internal perspective, a Blockchain-based system will make forecasting and budgeting easier, as the instant availability of data will translate into immediate generation of financial statements.
J.P. Morgan taking the lead in developing and applying a Blockchain-based solution could accelerate the technology spreading by lighting up its potential. As the first trials are on their way, soon banking might be the next disrupted industry.