This article in Forbes points out the latest update on JPM Coin, which was first announced back in early 2019, and uses that as a proxy for a broader overview of blockchain in B2B payments.
We have been covering the corporate banking use cases for blockchain since early 2016 when the super-hype was building. In numerous follow ups, we have been describing the two most likely use case categories for the technology as being in cross-border payments and trade services.
That is essentially what is playing out and will continue to do so over the next five plus years. There are several commercial blockchain trade networks operating at present and these will continue to grow scale and interoperability. The JPM Coin announcement is further validation that BCT is gaining ground.
‘In February 2014, Jamie Dimon famously sounded the alarm that Silicon Valley wanted to eat J.P. Morgan’s lunch or, at least, they would try. In the six years since, the bank has become one of the most forward-leaning when it comes to implementing FinTech. Yesterday, J.P. Morgan announced that it’s digital currency, JPM Coin, is live and being used by a “large technology client” for cross-border commercial payments. Additionally, the announcement detailed progress at Onyx, a new business that houses the bank’s blockchain and digital currency development efforts. While the popular press had been quick to point out Mr. Dimon’s disdain for bitcoin as late as last year, it is evident the bank has never doubted blockchain’s potential.’
Most readers know of Ripple and its blockchain network RippleNet, which connects banks in the network for cross-border payments, which can be done via stable coin or the Ripple crypto XRP. Banks have generally steered clear of non-fiat cryptos due to the volatility and lack of regulator consensus. JPM Coin is a stable coin, backed by the USD.
The author goes on to discuss the use of checks in U.S. B2B use cases and how blockchain can extract 75% of that processing cost. We will not have to wait for BCT, however, since the pandemic is thrusting digital everything into the forefront, as we recently pointed out. Other important features include enhanced security and more seamless processing. JPM Chase has established a business unit, called Onyx, for commercializing its blockchain capabilities. Clearly there is more to come from this group.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group