Almost a year ago, JP Morgan announced a new blockchain correspondent banking network. Initially, the partners in the Interbank Information Network (IIN) were Royal Bank of Canada and ANZ. Today the Financial Times reports that there are more than 75 members including Santander and Société Générale.
Currently, the network processes US Dollars only and expects to handle 14,500 payments daily. As the network increases the number of transactions should expand exponentially.
When everything works smoothly, the current payment systems work just fine. It’s the exceptions that are problematic. At a recent blockchain conference, a SWIFT executive commented that SWIFT transactions are almost real-time. The delay is in the banks crediting accounts.
But if something goes wrong, or there’s a compliance query, banks have to contact each other to solve issues. Banks can only make payments to other banks they have a direct relationship with. Hence there are often in-between or correspondent banks involved. So instead of a one-to-one inquiry, a question can include asking three or even four banks. This is especially the case with payments to or from countries outside of the US and major EU economies.
Resolving these queries adds considerable delays. If the data is shared on a blockchain, then the enquirer just needs to check the blockchain.
When IIN was first announced, JP Morgan stated that “IIN will allow payments to reach beneficiaries faster with fewer steps and better security.” They also emphasized that it would resolve the costs associated with payment delays. At the time Emma Loftus, Head of Global Payments said: “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”
JP Morgan uses its own blockchain Quorum which is an enterprise version of Ethereum with enhanced privacy.
Competition
International payments is an area where fintechs have made reasonable dents in the banking sector. Especially UK -based unicorn Transferwise which processes £3 billion a month and last year earned revenue of £117 million. The World Bank estimates the global cost of remittance averages 7.13% of the money transferred.
And in the blockchain sector increasingly Ripple is connecting banks as well.
Bank participants
Americas: Banca Mifel, Banco BICE, Banco Bisa, Banco Davivienda, Banco de Crédito del Perú, Banco de Galicia y Buenos Aires, Banco Industrial, Banco Mercantil del Norte, Banco Mercantil Santa Cruz, Banco Nacional de Bolivia, Banco Popular Dominicano, Banco Regional, Banreservas, Bank of Montreal, Itau Unibanco, JPMorgan Chase, National Bank of Canada, Royal Bank of Canada, The Toronto-Dominion Bank
Europe: Allied Irish Bank, Banco de Investment Global, Banco de Sabadell, Banco Santander, Bankinter, Banque Internationale de Commerce – BRED (Suisse), Banque Thaler, CBH Compagnie Bancaire Helvétique, CIM Banque S.A Geneve, Cooperatieve Rabobank U.A., Credit Agricole, Norddeutsche Landesbank Girozentrale, PKO Bank Polski, Privatbank IHAG Zurich , Reyl & Cie, Société Générale, The First International Bank of Israel, UniCredit (through their subsidiary UniCredit Bank Austria)
Asia-Pacific: Australia and New Zealand Banking Group, BRAC Bank, China CITIC Bank International, China Guangfa Bank, Chong Hing Bank, Ho Chi Minh City Development JS Commercial, ICICI Bank, Indovina Bank, Joint Stock Commercial Bank for Investment and Development of Vietnam, KASIKORNBANK Public Company, KEB Hana Bank, Mizuho Bank, Prime Bank, PT Bank Central Asia Tbk, PT Bank CIMB Niaga Tbk, Resona Bank, Shinhan Bank, Sumitomo Mitsui Banking Corporation, Union Bank Of The Philippines, Vietnam Joint Stock Commercial Bank for Industry and Trade, Woori Bank
Central & Eastern Europe, Middle East and Africa: Al Rajhi Banking & Investment, Alawwal Bank, Bank ABC, Bank Al Habib, Barclays Bank Tanzania, Barclays Bank Zambia, Commercial Bank of Africa, Commercial International Bank (Egypt), Credit Libanais, DenizBank, Habib Metropolitan Bank, Joint-Stock Company BCS-Investment Bank, JS Bank, Kuveyt Turk Katilim Bankasi, MauBank, National Bank of Kenya, National Bank of Kuwait, Turkiye Finans Katilim Bankasi
