How blockchain-based Partior allows 24/7 real-time funds transfer in S’pore

The common story with cryptocurrency and the big banks is that they are at daggers drawn with each other.

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

The industry’s first initiative, Partior is poised to combine the best parts of crypto philosophy and merge it with the needs 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 hear from Armaan Sinha and Tiena Sekharan, both vice-presidents of Onyx (by JP Morgan) on this exciting new venture .

The faulty payment system

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

“The cross-border payment system is now in ruins,” Tiena said. “It’s an extremely complicated process as any cross-border transaction involves four to five correspondent banks. “

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

Tiena added that there is usually a lack of transparency and visibility when there is a delay. If money is lost, it takes even longer to find out where the money has gone.

You will need to take into account the different holidays and individual cut-off times with different geographies, especially when it comes to different time zones.

“It is even possible that the two markets do not have overlapping time zones at all. And all of this, of course, causes huge problems. ”

This is where blockchain-based Partior comes in to help solve all of these issues.

The perfect marriage between crypto and traditional banking

Partior temasek dbs jp morgan
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 that we should be able to access the best financial services regardless of the bank.”

Partior takes the convolution out of the correspondent banking system and extends 24/7 real-time payments to everyone, no matter which bank you do your banking with.

It aims to disrupt the traditional cross-border hub and spoke model which has resulted in common issues including multiple validations [and] checkpoints, which of course results in expensive and expensive post-transaction management and reconfiguration.

Armaan Sinha, Vice President of Onyx by JP Morgan

Partior enables financial institutions to offer their corporate clients the ability to facilitate payments in any currency in any geographic area in real time, 24/7.

It’s your money – you should be able to transfer it when you want, who you want to. You shouldn’t be limited by the 9am and 5pm weekday hours, and Partior is something that makes that possible.

Tiena Sekharan, Vice President of Onyx by JP Morgan

It reduces settlement time and enables programmable payments such as manual transactions, co-payment with the transparency, confidentiality and finality of settlement that traditional banking does not offer.

A ledger shared between banks

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

As a decentralized but authorized peer-to-peer network, Partior operates on a shared ledger technology infrastructure that aims to have information on multiple banks and currencies.

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

This initiative provides a solid result for MAS’s Ubin project, which seeks to explore the uses of blockchain technology for currency clearing and fixing.

This shared ledger is between several branches of JP Morgan itself and in the same currency. This process uses the JP Morgan coin (JPM coin), 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 trying to expand the scope of this ledger to include multiple banks and currencies to create a shared ledger of the banking network, but in 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 live currency, which is the US dollar, and there are two more currencies in the works.

Commercial banks participating in this platform and their customers through participating banks can make payments to and from their digital deposit accounts on the deposit account chain. It’s all taken care of with precision, in real time, 24/7, 365 days a year.

It is important to note that all account balances will be treated as deposits with the trading side. And the platform does not involve creating, owning, or transferring stablecoins or other digital tokens to a life participant.

I think as people who represent traditional banks we have to remember that Barnes and Nobles was not disturbed by WH Smith. He was disturbed by Amazon.

So there is a need of the hour right now for different banks to come together. The bank is a competitive business Bankers are very competitive. But, it is time to come together to share records so that we can provide the most superior service to our customers and that is what Partior is trying to do.

Tiena Sekharan, Vice President of Onyx by JP Morgan

JPM coin
Image Credit: Onyx by JP Morgan

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

Generally, companies tend to keep pockets of money in various jurisdictions simply because they are not guaranteed movement of funds that can occur if they have only one main account.

“There is a significant reduction in costs because we convert everything via transfers. All of this uses distributed ledger technology, so it’s extremely secure [and] secure, ”Armaan said.

“Bearing in mind the sustainability of arbitration, this system is a top interoperable with other blockchain networks through an API.”

Programmability of payment

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

“What I mean by that is that it will no longer be necessary for Treasuries working in various banks to manually enter each transaction. It is possible to automate a lot of things,” explained Tiena.

“For example, if the balance of a particular account drops below a level that is comfortable with, the amount may be separated from another account to that account.”

If this sounds vaguely familiar to you, it’s because this concept is adopted from blockchain smart contracts.

Partior enables programmability of payments, such as automated applications, and government funding of an additional payment.

“Because all of this is already on a digital account, it’s basically about JP Morgan Coin and how the shared ledger technology is going to take shape,” Armaan said.

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

This means that Partior will be interoperable with current RPG (buy at risk) and Fedwire systems. She 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 as the central bank’s digital currency comes online, Partior should be able to interact with all of these platforms.

It will not be a siled system that exists in a vacuum. It will be something that will interoperate with the various forms of payment that exist and are already well established in the global payments system.

Tiena Sekharan, Vice President of Onyx by JP Morgan

As Partior is not a silo system, all participants operate on a single platform and this is advantageous as it makes pre-validation possible.

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

Tiena pointed out that troubleshooting takes a long time, consumes resources and causes delays. With Partior on a single platform, pre-validation becomes possible, and all these tedious 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 converting US dollars as well as Singapore dollars between JPMorgan and DBS within Singapore as we speak.”

These transactions take place live, the platform being already configured. Partior is focused on building by adding more settlement banks, more participating banks, and more businesses to the system.

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


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

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