How blockchain-based Partior enables 24/7 real-time transfer of funds to S’pore

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The common narrative with cryptocurrency and big banks is that they are at loggerheads with each other.

After all, the very existence of cryptocurrency somewhat undermines the purpose and functions of big banks. However, the creation of partior – a joint venture between JP Morgan, Temasek and DBS – will change all of that.

An industry-leading initiative, Partior is set to combine the best parts of the crypto philosophy and blend it with the demands of the traditional banking system.

In a workshop at the Singapore Fintech Festival 2021 titled “Blockchain and Big Banks: The Yin and Yang of Modern Economy”, we heard from Armaan Sinha and Tiena Sekharan, both vice presidents of Onyx (of JP Morgan) on this exciting new venture.

The faulty payment system

Ask any banker and they will tell you that a bank’s payment system is extremely complicated. Contrary to popular belief, bank payment systems are not as intuitive or simple as you might think.

“Today the cross-border payment system is in ruins,” Tiena said. “It is an extremely convoluted process for any cross-border transaction to involve four to five correspondent banks.”

There would be a very long settlement cycle between the time the payment is initiated and the time it reaches the payee.

Tiena added that there is usually a lack of transparency and visibility in the event of a delay. If you lose money, it takes even longer to figure out where it went.

You should take into account the various holidays and individual closing times with different geographic areas, especially when it comes to different time zones.

“It’s also possible that the two markets don’t have overlapping time zones at all. And this obviously causes huge problems.”

This is where the blockchain-based part comes into play to help address all these issues.

The perfect marriage between crypto and traditional bank

Image credit: Onyx by JP Morgan

Tiena describes Partior as “a natural extension of JPM Coin” because JPM Coin requires someone to be a customer of JPMorgan. “We believe you should be able to access the best financial services regardless of the bank.”

Partior eliminates convolution in the correspondent banking system and extends 24/7 real-time payments to everyone, regardless of which bank you bank with.

Aims to break the traditional cross-border hub and spoke model that has led to common weaknesses, including multiple validations [and] checkpoints, which obviously lead to costly and costly post-transaction management and reconfiguration.

Armaan Sinha, Onyx Vice President of JP Morgan

Partior enables financial institutions to offer their corporate clients the ability to facilitate payments in any currency in any geographic region in real time, 24 hours a day, 7 days a week.

It’s your money: you should be able to transfer it whenever you want, to whoever you want. You shouldn’t be limited by 9am and 5pm weekday times and Partior is something that actually makes this possible.

Tiena Sekharan, Onyx Vice President of JP Morgan

It reduces settlement times and allows programmable payments such as manual transactions, co-pay with transparency, privacy, the settlement purpose that traditional banks do not offer.

A shared ledger between banks

Partior temasek dbs jp morgan
Image credit: Onyx by JP Morgan

As a decentralized but licensed peer-to-peer network, Partior runs on a shared accounting technology infrastructure that aims to have information across multiple banks and currencies.

It is built on the Ethereum quorum, a fork of the Ethereum blockchain.

This initiative provides a strong result a MAS “Ubin Project”, which seeks to explore the uses of the blockchain technology for clearing and setting the currency.

This shared ledger is across multiple branches of the same JP Morgan and in the same currency. This process uses JP Morgan currency (JPM currency), a digital representation of a deposit account, facilitating the movement of funds between branches and JPMC networks.

“Essentially, it allows customers to transfer US dollars between JP Morgan branches 24/7. We are looking to expand the scope of this ledger to include more banks and currencies to create a shared ledger of the banking network. but within a particular region “.

Currently, there are six branches of JP Morgan in New York, Singapore, Hong Kong, London, Luxembourg and Australia. There is only one real currency, which is the US dollar, and there are two other currencies in the works.

Commercial banks participating in this platform and their clients from participating banks can make payments to and from their digital deposit accounts on the chain to deposit accounts. All of this is supported with precision, in real time, 24/7, 365 days a year.

It is important to note that all account balances will be treated as deposit liabilities with the business side. And the platform does not involve the creation, holding or transfer of ongoing stable coins or other digital tokens to any participant in life.

I think as people who traditional banks, we have to represent ourselves that Barnes and Nobles was not interrupted by WH Smith. It was discontinued by Amazon.

Hence, there is a need for the hour right now for several banks to come together. Banking is a competitive business, bankers are very competitive. But it is time to get together to share ledgers so that we can provide the best service to our customers and this is what partior tries to do.

Tiena Sekharan, Onyx Vice President of JP Morgan

Image credit: Onyx by JP Morgan

Businesses can now deliver funds 24/7, all in real time. With that, there is a strong liquidity optimization opportunity.

Typically, companies tend to hold pockets of money in various jurisdictions simply because they are not guaranteed the movements of funds that can occur if they have a main account.

“There is a significant cost reduction because we are converting everything through transfers. All of this uses distributed ledger technology, so it’s extremely secure [and] sure, ”Armaan said.

“With future-proof arbitration in mind, this system is the ultimate in interoperability with other blockchain networks via an API.”

Payment scheduling

Since Partior allows for 24/7 real-time payments to different countries and banks, it’s something that allows for programmable payments.

“What I mean is that it will no longer be required by the Treasuries working at the various banks to manually enter every single transaction. A lot of things can be automated, ”Tiena explained.

“For example, if the balance in a particular account falls below a level you feel comfortable with, the amount can be transferred from another account to that account.”

If this sounds vaguely familiar, it is because this concept is adopted by blockchain smart contracts.

Partior allows for scheduling of payments, such as automated apps, and additional payments of government funds.

“Since all of this is already on a digital account, it’s essentially about JP Morgan Coin and how the shared ledger technology will take a definitive shape,” said Armaan.

Partior is also fully interoperable. “The idea here is to make sure we are compatible with the past but also ready for the future,” said Tiena.

This means that Partior will be interoperable with existing RPG systems (Risk Purchase Purchase) e Fedwire. He further explained that Partior would be interoperable with TERP systems, possibly PayMet from Malaysia and UPI from India.

Partior will also be future-ready, which means that when the central bank’s digital currency goes online, Partior should be able to interact with all of these platforms.

This will not be a silo system that exists in a vacuum. It will be something that will interact with the different forms of payment that exist and are already well established in the global payment system.

Tiena Sekharan, Onyx Vice President of JP Morgan

Since Partior is not a siled system, all participants operate on a single platform and this is beneficial because it makes pre-validation possible.

“It is possible to pre-validate accounts and transaction details. When that happens, there are fewer errors later on. And anyone who has worked in global cross-border payments looking for mistakes and correcting those mistakes is the real challenge. “

Tiena pointed out that debugging takes a lot of time, consumes resources and causes delays. With Partior on a single platform, pre-validation becomes possible and all these cumbersome processes can be avoided.

The future of Partior

Partior temasek dbs jp morgan
Image credit: Onyx by JP Morgan

Partior is not a pipe dream, but a reality that is happening today.

“The project is a pilot phase, where we are currently transforming US dollars and Singapore dollars between JPMorgan and DBS within Singapore as we speak.”

These transactions are happening in real time, as the platform has already been set up, and Partor focuses on building by adding more settlement banks, more participating banks, and more companies to the system.

This new platform is set to revolutionize the traditional banking system and give way to a new payment system that uses the best of the blockchain and banking system.

Featured Image: Partior LinkedIn / Citywire Asia / Munshi Ahmed via Getty Images / Shutterstock

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