Banking giant JPMorgan Chase has partnered with German industrial group Siemens to develop a blockchain system for payments.
According to a Financial Times article, companies said that this is an unprecedented application.
As Siemens highlighted, enhanced automation via blockchain is needed to process the growing number of transactions due to the increasing popularity of payment models:
“If the business continued as it is today, I would say that we are fine with setting up our treasury. We can automate a little bit and maybe reduce costs and cash allocation,” Heiko Nix, head of cash management and payments at Siemens, told the Financial Times. “That’s not why we’re doing this. The reason is that we are seeing a big shift due to emerging digital business models, because we will no longer be able to predict cash, for example.”
Blockchain usage by large companies
The system developed by JPMorgan’s blockchain unit, Onyx, is being used to automatically transfer money between Siemens’ own accounts.
While the system is currently only used for dollars, there are plans to allow transfers in euros next year.
Companies declined to comment on the volume of payments that the new system has processed so far.
As Naveen Mallela, Global Head of Coin Systems at Onyx, pointed out, the solution supports programmable payments in addition to current uses such as direct debits and standing orders.
“You want more flexible rules or flexible triggers, that’s where the current infrastructure falls short,” Mallela said.
He added that JPMorgan has a portfolio of customers who would like to offer the new system. However, Siemens is the tool’s first anchor customer.
Wells Fargo will use blockchain
But it’s not just Siemens that has plans to run operations using BTC and cryptocurrency technology.
After all, HSBC and Wells Fargo said last week that they had agreed to settle currency trades directly on the blockchain.
Wells Fargo will use HSBC’s blockchain tools to settle bilateral foreign exchange transactions.
More precisely, Wells Fargo is expected to use the FX Everywhere platform developed in 2018 by HSBC for interbank transactions.
The blockchain settlement platform is mainly used to settle transactions between banks within the HSBC group. Thus, the most recent partnership will be the first use case outside the HSBC group.