United States Banking giant JP Morgan has partnered with Siemens to develop a blockchain based payments system for the German industrial group.
Siemens will use a blockchain based payments system to manage payments between its own accounts the FT first reported. Siemens reportedly said the improved automation is needed to process the far greater number of payments it expects due to the growing popularity of payment models like pay per use.
“If the business would stay the same as it is today, I would say we are fine regarding our treasury set-up. We can automate a bit and maybe we reduce costs and cash allocation,” Heiko Nix, head of cash management and payments at Siemens, told the Financial Times. “This is not the reason why we are doing this. The reason is that we are seeing a huge change due to the emerging digital business models, because we will no longer be able to forecast cash, for example.”
The payments system is currently only used for US dollars, but it could facilitate euro payments as soon as next year. The companies declined to comment on the volume of payments the new system had processed to date.
JP Morgan’s blockchain unit, Onyx, will build the payments system. “You want more flexible rules or flexible triggers, that is where the current infrastructure falls short,” Naveen Mallela, global head of coin systems at Onyx told the FT.
The move comes as banks experiment with blockchain to update payments rails and to facilitate instantaneous cross border settlement. Last week HSBC and Wells Fargo announced that they would use distributed ledger technology (DLT) infrastructure provided by Baton Systems to increase interbank settlement speed and efficiency.