J.P. Morgan Chase & Co. has been experimenting with how blockchain technology can cut back costs and create a smooth transaction within their capital markets, where users can buy and sell securities. To do this, the bank implemented a blockchain-based platform called Dromaius. At the moment, employees of the bank are still working on integrating this technology before expanding it to customer use, according to Christine Moy, executive director and head of J.P. Morgan’s Blockchain Center of Excellence.
What is Blockchain?
This technology is a kind of system that keeps records, like a ledger. This allows for participants to add blocks of information after running algorithms to evaluate a transaction. If all parties are in agreement that the transaction is indeed valid, meaning the information matches the blockchain record history, it will be approved, time-stamped, and added to the blockchain ledger. This data is then encrypted and can not be changed. In fact, the information will remain up-to-date in all the participant's systems. The appeal of blockchain to banks is that they reduce costs, but furthermore, this technology can also determine how banks handle important information on the blockchain ledger.
At this time, J.P. Morgan is working with other banking institutions who are also experimenting with blockchain platforms. They're using them in capital markets where there are both stakeholders involved as well as large sums of money.
There are multiple systems being used today for different stakeholders, such as asset managers and fund administrators within the capital markets. This division of information can be easily solved using blockchain technology. Using blockchain as a financial instrument will help secure and share infrastructure. This means that instead of having different storehouses for transaction information among stakeholders, the blockchain provides just one application that all involved can share and participate in together. It is designed so that everyone can trust the application and each other. In the end, the simplification process of using blockchain can decrease costs significantly for financial institutions. Blockchain streamlines information, helps saves money, and makes the transaction experience simplified.
To connect institutions with blockchain experts, J.P. Morgan and Santander, among other banks and tech giants, have formed the non-profit Enterprise Ethereum Alliance. This non-profit has used this network to help build Dromaius. Over the next year, a blockchain team of 15 employees and Ms. Moy expect to overcome the challenges linked to deploying the blockchain-based platform for capital markets. At the present time, this exciting technology is still in the beginning stages.
Challenges Faced by Blockchain Infrastructure
Some of the challenges this technology face includes constructing powerful systems that can support blockchain infrastructure while coordinating with multiple stakeholders regarding blockchain protocol. Another issue is trying to determine how blockchain can integrate with legacy systems. Furthermore, risk monitoring and operational processes may need to adapt to include blockchain technology.
Include Some of These Techniques Into Your Company
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