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JP Morgan, DBS blockchain payment platform Partior launches first pilot

partior jp morgan dbs temasek blockchain payments

Partior, the Singapore interbank payment system founded last year by JP Morgan, DBS Bank and Temasek, launched its first pilot. The enterprise blockchain platform aims to improve the speed and reduce the costs of cross border payments that are expected to reach $156 trillion in 2022. It will start by focusing on Singapore Dollar and U.S. Dollar currencies.

The open network grew out of the Monetary Authority of Singapore’s Project Ubin, which started as an exploration of central bank digital currency (CBDC). 

Partior’s wholesale clearing and settlement system can enable settlement in less than two minutes, improve transparency, and reduce the need for intermediaries, which removes transaction costs. 

Partnering to build the network

Payments are all about network effects. Hence to reach its potential, the wholesale network needs to attract as many participants as possible.

The first partner is Bahrain’s ABC Bank which is very active in trade finance. During the launch press conference, Lim Soon Chong of DBS Bank highlighted two early use cases, one of which was open account trade finance and the other settlement of digital asset trades.

Given cryptocurrencies don’t have cut off times, there’s a need for 24/7 settlement and the atomic settlement model offered by Partior. When DBS launched its DBS Digital Exchange last year, we highlighted the restricted operating hours. Partior could help address that.

Partior’s CEO Jason Thompson said that talks were underway with numerous partners, mentioning two. He revealed that Standard Chartered integrated with Partior as part of its entry in Singapore’s Global CBDC Challenge. Discussions are in progress with Baton Systems, the DLT settlement platform where JP Morgan was the first high profile client.

DBS’s Lim Soon Chong gave an analogy between Partior and an airline alliance like the Star Alliance. Instead of carrying people and cargo, Partior deals with information and money. Where airlines might address trunk or regional routes and connect with other modes of transport, he envisions banks handling the trunk routes on Partior. Money transfer firms manage regional routes or specialists might serve securities globally. And like airlines, there’s a need to link with other partners.

Another perspective is the contrast between Web 2.0 with centralized platforms and Web 3.0 and its collaborative model, which Pradyumna Agrawal of Temasek emphasized. “There are forward looking institutions who understand that they cannot simply function as walled gardens. I think that’s an important shift that’s happening,” he said.

He went on to explain that the institutions will compete with each other at the front end where they interact with customers but can share a common infrastructure in Partior at the back end.

The future is innovation

Additionally, Agrawal mentioned that the key to Partior’s success will be execution. On that note, at the press conference, Partior’s CEO Jason Thompson gave a three to five-year timeframe for mass adoption of the network. He wouldn’t be drawn on details of the business model other than to say the revenue model is transaction-based. Given a key motivation is the reduction in costs, the pricing will need to be relatively low.

Apart from the cost advantage, JP Morgan’s Sridhar Kanthadai spoke about the advantages of DLT being programmability, immutability and instant settlement. He sees Partior as addressing many of the challenges in legacy payments. “I think what is more important is that we expect that infrastructure to spur innovation,” he said.

Circling back to the execution point, the key will be to sign up other institutions. And that’s about more than the advantages of the technology and platform. It’s also about governance. Looking at enterprise blockchain solutions in other sectors, many said that IBM and Maersk’s TradeLens would never sign other major shipping lines. But it did.

As a follow up to this article, we interviewed Jason Thompson, Partior’s CEO about its roadmap and governance.

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