/JPMorgan Aims to Patent Blockchain-Powered Interbank Payments

JPMorgan Aims to Patent Blockchain-Powered Interbank Payments

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JPMorgan has filed a patent for a blockchain-based system for the reconciliation and facilitation of financial transactions between banks, according to a set of recently published filings.

In a patent application published by the U.S. Patent and Trademark Office on Thursday (which was originally submitted last October), JPMorgan outlined a system that uses distributed ledgers to record payments being sent from one bank to another using a peer-to-peer network. According to the bank, the tech’s use would provide “a unique system for recording transactions and storing data.”

The ability to replicate that data on the ledge across a public or private distribution network offers another benefit, the filing notes.
In one of the most specific pieces of language used in the filing, the system was described:

“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.”

The patent made mention of the usual benefits associated with using blockchain in banking, including cheaper and faster cross-border settlements. The patent compared blockchain with present practices: “for a cross-border payment to be made from a payment organization to a payment beneficiary [at present], a number of messages must be sent between the banks and clearing houses involved in processing the transaction

It’s perhaps unsurprising that JPMorgan would seek a patent for its blockchain-related work in the area of interbank payments. The bank launched a platform for just that kind of service, built on ethereum-offshoot Quorum, days before it filed the patent application.

“Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks,” Emma Loftus, head of global payments and foreign exchange for JPMorgan Treasury Services, said at the time.
If successful, the system will expand from the company’s commercial bank to other “sub-banks”; the system could also act as a sort of test for a blockchain network that customers would interact with directly.