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The US investment bank J.P. Morgan has partnered with DBS Bank in Singapore and state-owned investment company Temasek to create a technology company to develop a blockchain-based payment platform.
The joint statement states that the company is called Partior and aims to reduce friction in cross-border payments, trade and foreign exchange transactions.
Partior (Latin for “distribute” and “share”) is designed as a general open platform based on the ConsenSys quorum blockchain developed by JPMorgan Chase and intended to enable banks to have more effective digital clearing and settlement in the global solution of the banking industry. The platform is to be launched in the third quarter of this year.
In an interview Forkast News, Han Kwee Juan, head of strategy and planning at DBS Bank, the largest bank in Southeast Asia, said that the current cross-border payment model is fraught with flaws. He added that the intermediary bank has to double-check the payment details, which usually leads to high costs and problems after the transaction.
Piyush Gupta, Chief Executive of DBS, said in a press release: “By taking advantage of blockchain and smart contract technology, the Partior platform will resolve current issues.”
Gupta added that the open platform will enable banks around the world to provide real-time cross-border multi-currency payments, trade finance, foreign exchange transactions and DVP securities settlement in real-time. The serviceability, immutability and availability are integrated into their service suite.
The statement said that the Partior platform will also develop a wholesale payment route based on the currency of digital commercial banks in order to obtain instant payments, thereby helping banks cope with the challenges posed by the current sequential one Method for processing global payments.
According to the DBS Bank’s performance briefing published today for the first quarter of 2021, Partior will enable the bank to jointly create a market infrastructure for the digital economy. In this way, banks can improve their services to bank customers and corporations by providing faster speed, security and transparency in blockchain-based payment and clearing services. The bank also plans to commercialize its proprietary technology for a new source of IP-based revenue.
About 656 million people live in Southeast Asia, which is 9% of the world’s population. However, unlike the US or the Eurozone, this region does not have a single currency and the payment environment is fragmented as different countries/regions have different financial market infrastructures. According to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company, the digital payments industry in the region is projected to grow to $1.2 trillion by 2025 and the remittance flow is also expected to grow from $15 million in 2020 to $35 million in 2025.
Stephen Richardson, vice president of Fireblocks, a digital asset custody service provider, told Forkast News that given the importance of remittance payments in the Asia Pacific region, it makes sense for banks to get involved. Richardson said this can optimize cross-border payments and minimize the credit risk, counterparty risk and inefficiencies that banks are facing today with wire transfer payments.
Chia Hock Lai a co-chair of the Singapore Blockchain Association and co-founder of the Global Fintech Academy of the Global Association of Singapore Fintech Professionals, told Forkast News in an email: “The announcement proved the feasibility of blockchain for wholesale payments, especially those cross-border in nature with foreign exchange involved. By leveraging on the native strength of blockchains such as programmability and traceability, it makes cross-border payments and settlement faster, cheaper and more efficient.”
Chia said, “This will catalyze more blockchain use cases especially in the supply chain, trade finance and securities settlement in Asia given that real-time visibility and settlement are game-changers in these use cases.”