JP Morgan Chase and Co have, together with the National Bank of Canada and some other large companies, successfully tested a new blockchain platform for issuing financial instruments. According to them, this will help to streamline origination, settlement, interest rate payments and other processes.
Based on Quorum
The platform has been built on the basis of Quorum, which is a type of open source blockchain that has been developed by JP Morgan itself. The test conducted on Wednesday mirrored the Canadian bank’s $150 million offering on the same day of a one-year floating-rate Yankee certificate of deposit.
Who were the other participants in the test?
Other participants in the experiment included Goldman Sachs Asset Management, the fund management arm of Goldman Sachs Group Inc, Pfizer Inc and Legg Mason Inc’s Western Asset and other investors.
Banks have already poured in millions of dollars to develop blockchain to streamline their processes and also to save costs. Blockchains have been built for the purposes ranging from cross-border payments to securities settlement.
David Furlong, the senior vice-president of artificial intelligence, venture capital, and blockchain at National Bank of Canada, said,
“Blockchain-related technologies have the potential to bring about major change in the financial services industry.”
What is the problem with Quorum?
JPMorgan is thinking of letting go of Quorum as, according to Umar Farooq, the head of blockchain initiatives for JPMorgan’s corporate and investment bank, the technology has garnered a lot of outside attention. JPMorgan does not want to waste time and energy by fielding requests for help from users of other companies.
JPMorgan also does not want to charge for the assistance that it will provide as software support is not the bank’s business. A person familiar with the matter has disclosed this fact.
Farooq has also disclosed that the discussions for letting go of Quorum are in the early stages, and many financial institutions and large technology companies have shown interest. However, the names of the companies were not disclosed.
However, JPMorgan also wants to augment the Quorum team by bringing in engineers from other divisions of the bank but who have become familiar with the platform.
Farooq concluded by saying,
“We haven’t really seen a lot of really large scale things go into production yet. There are few cases where blockchain can really shine.”