JPMorgan’s Interbank Information Network (IIN), a distributed ledger technology (DLT) based payments solution, is reportedly “producing results at scale.”
Blockchain Investments May Soon Pay Off
According to the Financial Times, the IIN project is progressing steadily towards enterprise level performance – which means that the estimated $1.7 billion that has been spent on blockchain-related projects is beginning to pay off.
David Treat, the managing director at Accenture, a multinational management consulting and professional services company, said:
[Looking at blockchain] from a size of ecosystem perspective and starting to do something in production, having some of the world’s biggest banks is a big deal. [At the beginning of 2018,] everything was experimental and prototypes, production was something small and safe in the corner.
Treat added: “What we’ve seen this year is a move to real life production. And now the first of to those ecosystems is taking on real life use cases.”
More “Proof Points” Indicate “Real Value” Is Coming Soon
Treat, who has previously served as executive director of UBS investment bank, revealed that “more and more [new] proof points” indicate that we are going to see “real value” coming out of the numerous blockchain projects that have been launched so far.
Notably, financial institutions do not think IIN will help reduce transaction costs. Umar Farooq, the head of blockchain initiatives at JPMorgan Chase, remarked:
Blockchain is frankly a great technology, however, I’m not sure that the initial hypothesis that everyone had about saving significant sums of money is where you’ll see a lot of the new products being developed.
According to Farooq, the real innovation in blockchain-related projects will come from launching new products, and not necessarily by making traditional business processes more efficient.
Previously, JPMorgan’s executives have acknowledged that large banks will face increasing competition from fintech startups, and one of the goals behind the IIN initiative is to help traditional financial service providers maintain their dominance over the world’s trillion dollar financial markets.
Only 300,000 Transactions Per Day
At present, IIN is still in its initial stages of development and it remains to be seen whether it will be able to compete with other cross-border payment solutions such as those being developed by American fintech Ripple Labs and Corda.
JPMorgan’s development team has estimated that IIN will be able to process over 300,000 transactions per day – which may not be enough when compared to approximately 14.5 million payments settled by SWIFT each day.
Currently, there are over 100 entities that are participating in the IIN project, however, there are reportedly not any fintech firms that have seriously considered joining JPMorgan’s DLT-based initiative.
