Deutsche Bank, Germany’s largest bank, is joining the 320 banks in the JPMorgan Chase-led blockchain initiative, the Financial Times reported Sunday (Sept. 15).
The move is intended to lower costs at Deutsche Bank — which clears more euro-denominated payments than any bank worldwide — and speed up cross-border disbursements to avoid expensive lag times.
The JPMorgan Chase-led Interbank Information Network (IIN) will allow Deutsche Bank to give its clients improved overall service, Ole Matthiessen, the bank’s global head of cash management told FT.
“Our competitors are not just the other banks, it’s also new players in the market, we need to become efficient enough to provide seamless real-time and digital process,” he said.
Matthiessen also said Deutsche Bank could also make use of IIN’s platform to share know-your-customer (KYC) checks with other banks.
“A network that only has JPMorgan’s clients will have very big natural limitations,” Takis Georgakopoulos, head of payments at JPMorgan, told FT. “It would mean that all of these other smaller banks would still need to have bifurcated procedures, what they do with JPMorgan and what they do with other banks would still have to be different.”
The IIN can speed up transactions and issues by offering a “mutually accessible ledger,” saving JPMorgan time and money, Georgakopoulos said.
More than 65 banks are live on the JPMorgan blockchain, and 255 are in the process of joining. IIN said it wants to sign up 400 banks before the year is over.
Aside from the IIN, Mastercard and R3’s cross-border blockchain platforms are also striving to make global payments faster.
Although there are 57 real-time payments platforms operating in more than 72 countries, with even more under construction, none is universally applicable. Different regions have their own unique payment rails, and no two abide by the same regulatory framework.
To solve the problem, seven European payments operators announced earlier this month the start of a new pan-European network focused on cross-border mobile payments called the European Mobile Payment System Association initiative.
In June, the Chinese digital payment player Alipay and a handful of European mobile wallets announced a partnership to promote QR code payment interoperability.