It may amaze some people to know that JP Morgan Chase invested heavily in the blockchain technology. Umar Farooq, an experienced banker who changed his career to become a blockchain expert at JP Morgan, explained how the bank is employing blockchain technology and was not afraid of using bitcoin.
It may amaze some people to know that JP Morgan Chase invested heavily in the blockchain technology. Umar Farooq, an experienced banker who changed his career to become a blockchain expert at JP Morgan, explained how the bank is employing blockchain technology and was not afraid of using bitcoin. While speaking at the Yahoo Finance All Markets Summit for cryptos in New York earlier this week, he shared how the bank is using blockchain technology to meet the diverse needs of their clients.
He spoke about how they engage blockchain technology actively in solving numerous problems that banks face in their operations. It is clear that Farooq is far more open-minded about the use of bitcoin than you might even think. He said that the banking industry might say that bitcoin is bad and approve that blockchain technology is right; JP Morgan sees an opportunity in both the bitcoin and blockchain technology. He said that he would not go into details on whether cryptocurrencies are bad or good. Because cryptocurrencies too have problems.
The big problem, he explains, revolves around anti-money laundering regulations and Know-Your-Customer (KYC).“I have talked to everyone in the banking sector, but they see the potential, but they are grappling with this issue. I will not say that cryptocurrency is bad, but I think it needs to evolve.”
Elephant in the Room
Meanwhile, he did not shy away from commenting on his boss derogatory comments concerning bitcoin. He supported his comments and said that they were relevant to the current situations in the banking industry.But he did not reveal whether JP Morgan had plans to introduce bitcoin product to small-scale investors in the foreseeable future, saying; “At this time, everyone is studying this product.” Once we develop products that reflect the AML and KYC standards, then the bank will consider introducing this product” he added.
Farooq believes that blockchain will have an impact on major bank operations because it offers trust between several parties. Meanwhile, JP Morgan started to explore blockchain two years ago when the market was still green and developed Quorum that was founded on the Ethereum platform which introduced Jamie Morgan to GitHub. He does not perceive blockchain technology as a possible threat to the banking industry for now.
He expects that blockchain will radically affect the banking business and enhance their operations because of the trust element that was introduced by this technology. There is no threat currently in the short-term. Blockchain has already gripped JPMorgan, as there is a blockchain messaging room that that has attracted more than 1500 customers. He confirmed that they started small and they have now made sure that every department is represented in the blockchain. They perceive that the problems could be solved using reconciliation or data transfer. Today a group of blockchain experts is engaged in various activities across capital markets, custody and payments.
He admits that blockchain has been able to solve 20% of the problems they have experienced when handling their clients. He still believes that bitcoin did not pose a threat, but it needs to evolve.