The Fintech sector continues to benefit from the application of Blockchain technology and distributed ledger technologies generally. One blockchain patent filing after another, the possibilities of this emerging tech gets unraveled. A top global financial players is in on the Blockchain patent rush with a DLT-enabled system to facilitate payments between banks.
JP Morgan files patent for Interbank Systems powered by Blockchain Technology
American Financial giants, JP Morgan Chase has filed a patent application which seeks to utilize distributed ledger technology technology to enable and reconcile financial transactions.
JP Morgan’s patent application which was released by on Thursday bu the United States Patent and Trademark Office (USPTO) describes a new system for recording transactions in a peer-to-peer network of banks using a distributed ledger. Payments made from one bank to another wishing the network will be recorded on a distributed ledger often referred as Blockchain.
The filing described some distinct scenarios to describe the scope of its proposed system. Part of the application read:
“In one embodiment, a method for processing network payments using a distributed ledger may include: (1) a payment originator initiating a payment instruction to a payment beneficiary; (2) a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; (3) the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and (4) the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account.”
Benefits of Blockchain Technology in Financial Transactions
Due to its inherent features, Blockchain when applied in financial processes are very helpful in payment, recording and clearance. The technology is being explored for faster transactions, real-time settlements, and lower fees. In its filing JP Morgan explained the deficiencies of the current set up:
“For a cross-border payment to be made from a payment organization to a payment beneficiary, a number of messages must be sent between the banks and clearing houses involved in processing the transaction. This often results in a slow transaction, as there are may be delays in service due to correspondent banking, messaging networks, and clearing intermediaries in the payment flow.”
JP Morgan’s approach to Blockchain Technology
This patent, which was originally filed in October 2017, shows a significant interest in Blockchain innovations. Though averse to virtual currencies which is widely associated with Blockchain, the bank leaders have on various occasions talked up the companies interests and efforts around Blockchain and DLT. The bank had launched Quorum a platform based on the Ethereum Blockchain that allows similar interbank transactions.