JPMorgan is building a blockchain platform with six Indian banks to settle interbank transactions
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Blockchain technology continues to attract financial institutions, as even the banks cannot deny its efficiency, security, and potential. Right now, JPMorgan Chase & Co., a US-based multinational financial giant, is collaborating with Indian banks in an attempt to create a new blockchain-based platform. The idea is to use the platform for settling interbank dollar transactions, which is something that no less than six banks agreed to participate in.
The move comes as part of the greater strategy by the Indian government, which seeks to elevate the Gujarat International Finance Tec (GIFT) City. The country intends to turn it into a major financial and tech hub — one powerful enough to rival other similar financial centers, such as Hong Kong, Singapore, Abu Dhabi Global Market, or the Dubai-based International Financial Centre (IFC).
In a recent interview, Kaustubh Kulkarni, the senior country officer, India, and Vice Chairman, Asia Pacific, at JPMorgan, said the bank is interested in launching this pilot project at some point during the next few months. It intends to use it to analyze the banks’ experience.
Blockchain technology is still better than any traditional system
The banks that will participate in the pilot program are considered top private lenders, and each has a presence at GIFT City. Individual banks include ICICI Bank Ltd., HDFC Bank Ltd., Yes Bank Ltd., Axis Bank Ltd., and Induslnd Bank, Ltd. These, alongside JPMorgan’s own subsidiary, make up the six banks that will participate in the program.
Furthermore, the financial behemoth intends to use blockchain technology to streamline US dollar payments between different banks. For years, blockchain technology was praised as a better solution than the SWIFT system, which requires multiple workdays to process international payments. On the other hand, blockchain technology — even when it just emerged with Bitcoin — was capable of making global payments in only 10 minutes. With 14 and a half years of development, blockchain has become much faster, and is now capable of making transactions around the world in mere seconds, and in some cases — instantly.
Even among local banks, settlements can often take up to several hours, so switching to blockchain technology is still extremely beneficial in order to achieve maximum efficiency.
Kulkarni further added that JPMorgan intends to make transactions possible around the clock, every single day of the year. They would be processed instantly, and it would allow GIFT City banks to maintain their own business hours in accordance with the local time zone.
JPMorgan also proceeded International Financial Services Centre Authority’s clearance to conduct its pilot project using the Onyx blockchain technology. With the clearance in hand, the bank officially started the project on Monday. Onyx technology was launched by JPMorgan in 2020 and serves as a blockchain-based platform for wholesale payment transactions.
