Even though its CEO keeps making statements denigrating bitcoin, JPMorgan Chase & Co. (JPM) is bullish on the technology underpinning the cryptocurrency. The bank announced a pilot program yesterday to test a cross-border payments network.
According to a report in the Wall Street Journal, the solution uses blockchain technology to “enable faster and more secure cross-border payment” between participating banks. It uses blockchain’s distributed ledger to store database records from banks to enable faster processing. Currently, Royal Bank of Canada (RY) and Australia and New Zealand Banking Group (ANZ) are part of the consortium, but JPMorgan hopes to sign up two dozen institutions within the next six to twelve months.
This is not the first time that JPMorgan has used blockchain to streamline processes and make them more efficient. The WSJ report quotes Umar Farooq, head of channels, analytics and innovation at the bank, as saying that it has already used blockchain in securities, derivatives, custody services and transaction banking. (See also: Why Big U.S. Banks Are 'Very Afraid' Of Bitcoin.)
Farooq’s quote is a contrast of sorts with the bank’s CEO Jamie Dimon’s negative assessment of bitcoin, a currency that similarly uses blockchain technology. “If you are stupid enough to buy (bitcoin), you will pay the price for it one day,” he said. However, he has come out in favor of blockchain, stating that it is being used in several projects within the bank. “God bless blockchain technology,” Dimon said. (See also: JPM's Dimon Calls Bitcoin 'Fraud,' Its Investors 'Stupid.')
For JPMorgan, the move toward streamlining cross-border payments would be a lucrative one. In 2015, cross-border payments totaled $150 trillion and the payments industry earned $200 million from that amount. A vital chunk of that change came from banking institutions, which are responsible for the transfer and processing of these payments. SWIFT, which is a consortium of banking institutions, is the most widely-used mechanism for such transfers. But a series of recent hacks have undermined its credibility. With its cheap prices, faster processing times, and increased security, the JP Morgan network has the potential to replace SWIFT. (See also: Could Blockchain Really Have Better Security In Banks?)