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Home » Daily Briefing » Daily briefing - 25 September 2018

Daily briefing - 25 September 2018

Does JPMorgan intend to substitute its Interbank Information Network for the SWIFT network, which grew out of a previous JPMorgan innovation four decades ago? More than 70 banks now joined to the IIN, according to the bank. "The idea is that a mutually-accessible ledger across banks would allow them to quickly resolve issues such as compliance checks, faulty addresses or missing data, which can lead to payments being held up for weeks," writes the FT. "The banks expect to put about 14,500 US dollar-denominated payments a day through the enlarged network. 'Payment is one of the segments banks worry most about in terms of ceding to non-bank competition,' said Jason Goldberg, banks analyst at JPMorgan." Goldberg added that blockchain is a way to keep more of the payments business in-house." In reality, JPMorgan's blockchain initiative is a cobbling together of new and old systems, in order to protect the incumbent's business. Of course, SWIFT isn't going to let this business go without a fight, and has been developing its own blockchain-based solution called GPII. Also lurking is Ripple, which offers a solution for tracking payments information in real-time, something still not available within the JPMorgan system. Ripple's product, while more radical, may be doomed by the inability of the business to properly explain the distinction between the XRP token and Ripple's other offerings.

Not everyone is waiting around for JPMorgan's permissioned blockchain rails for enterprise payments. In Japan, remittances giant SBI Remit is partnering with Bitpesa to drive faster payments between Japan and Africa. "In addition to settling remittances in as little as one hour thanks to the bitcoin blockchain's fast settlement times, SBI Remit director Nobuo Ando told Forbes that Bitpesa's multiple international licenses will help jump-start African commerce with Japan on a larger scale by adding a much-needed layer of trust and transparency. 'Many companies are doing trade with African countries and they are suffering from the high cost and the slow speed and not very precise administration. So this is the market that we would like to go in, together with Bitpesa," said Mr Ando.

Meanwhile, as Tallyx CEO Aditya Menon told the Lafferty International Retail Banking Fintech Forum in London last week, there are applications for blockchain that will radically disrupt existing business models. Mr Menon has been working on blockchain for trade finance, an area in which he has long-standing expertise. Fresh out of a Masters programme in New York in the 1980s, Mr Menon got involved at an early stage with SWIFT, starting work with ABN Amro's New York office. "This success led me to start my first company at the age of 26, building the world's first Microsoft Windows-based corporate banking platforms for global trade finance, payments, and custody services," he writes. Before starting Tallyx, Mr Menon worked most recently as an MD at Citibank. "Initially, we thought the threat would come from Fintechs, and I co-authored a report in 2016, Banking at the Tipping point, that showed how Fintechs were ready to disrupt the world," he writes. "This year, before leaving Citi, I co-authored another paper, Bank of the Future, in which we revised our view to see that the real threat to banks was not the Fintechs, but big-techs — Amazon, Google, Facebook, Alibaba, Tencent, and Baidu." So after twenty years in banking, Mr Menon has now moved into the blockchain world. He explains his reasoning on his blog, here.


JPMorgan got three stars in the 2017 Lafferty benchmarking exercise. Citi received two stars. The maximum score is five stars.

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