JP Morgan wants to provide payments and digital currency services to the largest e-commerce platforms in the world. Speaking today at the Singapore Fintech Festival, the bank’s Head of Wholesale Payments, Takis Georgakopoulos, said this is the area that gets him most excited. That’s apart from the Project Ubin multi-currency payment system which JP Morgan is commercializing with DBS Bank and Temasek in Singapore.
Georgakopoulos said that JP Morgan has the components to serve the very large marketplaces around the world. These platforms have complex payment requirements, including accepting money, their own outbound payments and enabling buyers and sellers to interact, including using digital currency.
“How do you bring money in? Not just credit cards but also wallets and crypto and everything else,” he asked. “And how do you get money out and connect to all the real time payment systems and CBDCs in the future that are created around the world? And then how do you allow the sellers and the buyers in those marketplaces to interact with each other with the currency that the marketplace wants to have, and do that in an efficient way and a real-time way, while allowing the marketplace to bring in all the value-added services that they want.”
He continued: “Some if it is going to be blockchain and crypto-based, some it is going to be traditional based. But the scale and size and complexity of being able to serve those clients for me is a unique challenge and it’s a unique opportunity and is the thing that we spend most of our time trying to figure out how to make it happen.”
Onyx was the topic of discussion. This is the unit JP Morgan set up last month to focus on blockchain and digital currency solutions, including the bank’s work on Project Ubin.
The Monetary Authority of Singapore (MAS) spent several years on Project Ubin, initially exploring central bank digital currencies and then investigating private bank currencies.
JP Morgan and its JPM Coin solution was a key component of Phase 5 of that project, now being commercialized with DBS Bank and state-backed investment firm Temasek.
“We are thinking about how can you create a fully digital blockchain-based multi-currency clearing system,” said Georgakopoulos. “Such a thing does not exist anywhere in the world. And if successful, I think it can be a real game-changer. You’re going to have a modern network that’s going to work 24/7, that’s going to have multiple currencies, and that’s going to have the ability to have digital currencies for each one of the currencies that will be part of the network.”
He continued, “And it will allow us to do all of the cool things that blockchain and crypto technology allow you to do like programmable money and so on, which are things that you can never do with regular cash.”
While the project is initially focused on Singapore, if successful, he believes it will attract significant interest around the world.
Singapore is the home of the project because it’s an open market with numerous multinational companies, which makes multi-currency clearing more relevant. It also has a forward-looking regulator in MAS and Georgakopoulos credited DBS Bank as being world-class in terms of technical ability.
Other Onyx projects
The JP Morgan executive spoke briefly about topics previously announced, such as its Liink (formerly IIN) interbank data-sharing network and the fact that JPM Coin is now live as a pilot with the first client. But he also outlined a new project, which he acknowledged is a little less sexy, check clearing.
Forty percent of U.S. payments today are still check-based, with the government as the biggest check issuer. The bank is working on a project to digitize the clearing. Instead of physically sending checks for clearing, the checks are digitized onto a blockchain network, and the data is exchanged electronically. JP Morgan estimates this could save hundreds of millions of dollars a year.
In terms of Onyx as a whole, it has its own profit and loss account. Georgakopoulos dropped his reserve when he spoke about the division. “At some point, it will disrupt the regular way in which we do business,” he said. But he doesn’t see that happening any time soon.