In a significant development for the financial industry, JPMorgan Chase (NYSE:JPM) & Co unveiled a new feature on its JPM Coin on Friday, allowing clients to automate fund transfers under specific conditions. The first to implement this feature was Siemens AG (OTC:SIEGY), which used it to automatically transfer funds in response to potential shortfalls. Today, Naveen Mallela, head of Coin Systems at Onyx, announced on LinkedIn that this programmable payments product is now accessible to institutional clients for managing banking account shortfalls and facilitating fund transfers for margin calls and overdue payments. Early users now also include Cargill and FedEx (NYSE:FDX).
The introduction of programmable payments at scale by a traditional finance firm using commercial bank money is a first, according to Mallela. This move comes in the wake of growing interest in blockchain technology within the financial sector, as companies seek innovative solutions to streamline transactions and increase income on deposits.
JPM Coin currently handles approximately $1 billion in daily transactions, a small proportion compared to the $10 trillion in US dollar transactions processed by JPMorgan. However, with FedEx and Cargill already utilizing this system and plans underway to extend it to other banks, the scope of JPM Coin is set to increase.
This new feature builds upon JPMorgan's earlier efforts to leverage blockchain technology. Earlier this year, the company enabled collateral settlements and euro transactions via blockchain using JPM Coin. In addition, JPMorgan is crafting a blockchain solution for cross-border transactions that has awaited approval from US authorities since September 2023.
In today's interest-rate environment, where rates are at 5.5% or rising, the ability to program payments could be an attractive option for company treasurers looking to increase income on deposits. This development follows recent moves by other financial giants such as HSBC Holdings Plc (LON:HSBA) and Euroclear. Last week, HSBC launched a system for tokenized ownership of physical gold. Euroclear also entered the blockchain space late last month with a platform for issuing traditional securities.
Despite the success of JPM Coin, JPMorgan expressed concerns today over an overestimated market rally. This reflects similar concerns within the financial industry, as institutions continue to explore and implement blockchain solutions.
InvestingPro Insights
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InvestingPro Tips highlights that JPMorgan Chase has high earnings quality, with free cash flow exceeding net income. Moreover, the company has a strong track record of raising its dividend for 13 consecutive years, a testament to its consistent financial performance.
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