- J.P. Morgan partners with Siemens to create a new payment system based on blockchain technology to handle thousands of transactions and meet the requirements of constantly increasing transactions every day.
- The German tech company is J.P. Morgan’s first anchor client of Onyx, the blockchain unit of the bank.
- The payment system, when deployed, will be the first of its kind and carries plans to implement transactions in Euros by 2022. Many banks tend to initiate the use of blockchain soon.
J.P. Morgan, the giant of American Banks, has now collaborated with the German engineering tech organization, Siemens, to create a new blockchain-based payment system for the future. The multinational conglomerate corporation wants a system capable of executing and handling the constantly increasing number of transactions. And so far, blockchain technology seems the most suitable option.
JPMorgan’s First Anchor Client
As reported by the Financial times, Siemens collaborated with J.P. Morgan to improve the payment system’s automation and simultaneously became the bank’s first-ever anchor client of the blockchain unit, Onyx. This will serve as an opportunity for the German company to execute transactions in U.S. dollars in its own accounts. Both partners have dubbed this as the first of its kind application. Some future plans also hint towards the possibility of integrating payments in Euros by next year.
Increasing Transactions Need Enhanced Tech
As per Siemen, the volume of transactions will constantly increase in coming times, mainly as pay-per-use continues to gain popularity. Thus, the involved systems will be required to handle hundreds of thousands of transactions every single day, simultaneously maintaining reliability and transparency. This system, when deployed, might inspire other payment systems to migrate over the blockchain soon.
The German tech company’s head of payments and cash management, Heiko Nix, explained, “If the business would stay the same as it is today, I would say we are fine regarding our treasury set-up. We can automate a bit and maybe we reduce costs and cash allocation. This is not the reason why we are doing this. The reason is that we are seeing a huge change due to the emerging digital business models, because we will no longer be able to forecast cash, for example.”
Automation
This payment system was designed to automate the verification and recording of transactions. The capabilities digital technologies hold are incomparable to what traditional can accomplish. Onyx’s global head of coin systems, Naveen Mallela, explained that this system supports automated transactions such as standing orders and direct debits to surpass the current standard. He further commented that “you want more flexible rules or flexible triggers, that is where the current infrastructure falls short.”
Adoption Of Blockchain
This declaration has hinted that significant banks and institution giants should consider adopting blockchain technology and enhancements it serves for daily tasks, cross-border payment’s settlement processes, and payment rails. Some of the banks, including Signature Bank, PNC, Citi, Wells Fargo, US Bancorp, and Fifth Third Bank, have agreed to initiate the incorporation of blockchain tech this year.
Conclusion
Digitization of financial payments occurring worldwide has forced the entities in financial industries to search or build systems that may support their role in upcoming times. Blockchain is one of the solutions, and a massive increase in its use will be observed soon. This trend presents the rapid evolution of payment systems and is believed to grow massively, and adoption will be the key as no organization will enjoy being left behind.