American banking giant JP Morgan Chase has filed for a patent in the US demonstrating how to use the blockchain to make financial transactions quicker and easier.
The patent documents describe how payments would be sent between banks on a peer-to-peer network which provides “a unique system for recording transactions and storing data.”
The patent application explains:
How the bank will use blockchain
“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 filing also discusses how a distributed ledger or blockchain improves current banking software to make recording real-time transactions quicker and cheaper.
“For a cross-border payment to be made from a payment organisation to a payment beneficiary, a number of messages must be sent between the banks and clearing houses involved in processing the transaction,” the applications says.
“This often results in a slow transaction, as there may be delays in service due to correspondent banking, messagingnetworks, and clearing intermediaries in the payment flow.”
Critical information rethink
Although the US Patent & Trademark Office has only just published details of the application, the papers were filed in October 2017.
A few days before the filing, JP Morgan Chase launched an Ethereum offshoot called Quorum offering a similar payment service.
Then, Emma Loftus, head of global payments and foreign exchange at the bank, said: “Quorum will enhance the client experience, decreasing the amount of time – from weeks to hours – and costs associated with resolving payment delays. Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”
The Royal Bank of Canada and Australia’s ANZ Bank joined the payment platform at the start and other banks are expected to follow them.