JPMorgan Chase Is Tone Deaf To This Moment In History

Opinion | February 18, 2019 By:

JPM Coin was announced  last week— by its wholesale bank — causing a mixed reaction across both the financial and crypto industries.

Aside from JP Morgan’s institutional clients, which include large corporations and other banks, JPM Coin will mean little to the outside world. The announcement generated significant attention despite saying only that a pilot would start in the coming months, but this project is quite intriguing for a much wider audience than just JPM’s clients.

Bankers gonna bank: 2.0

Most people working in the frontier crypto industry (Money 2.0) are seeking alternatives to the traditional financial system. This announcement is counter to that approach.

Chase points to three JPM Coin use cases of interest for their institutional clients all centering on real-time settlement: international payments, securities funding, and global treasury management. While these cases center on the interests of their institutional customers, the same features, if extended beyond the confines of JP Morgan, have the potential to significantly alter the cost of using money in favor of individuals and businesses globally.

Unfortunately, that’s not the plan. The objective appears to be laying the groundwork for ending the bank’s reliance on legacy systems, both internal and external. If successful, JPM Chase expects to extract even more value out of the global money systems that it dominates. Don’t expect efficiency gains to translate to lower the cost of using money. Instead, the bank suggests “better rates” on their cash held with the bank to be a positive outcome for institutional clients.

A traditional client-server architecture and SQL database would offer a faster, cheaper, and smarter way to settle real-time payments within the bank than JPM Coin can likely be expected to realize.

Chase’s wholesale team generated $9 billion in revenue for its services in 2018, a whopping 6% of 2018 global revenues of $131 billion for the banking giant.

With this approach to blockchain and cryptocurrencies, does JP Morgan Chase finally prove once and for all that bankers are gonna bank — it seems naive to expect one of the largest financial institutions globally to disintermediate itself. For Money 2.0 pioneers working on the frontier, the JPM Coin announcement does however offer a certain encouragement.

Not all big banks are threatened by new technology, but many are started to grasp the magnitude of changing attitudes. Globally, users of money are starting to realize that the personal purchasing power they earn, spend, and accumulate over-time should be theirs, and theirs alone; held solely and separately from any “trusted” institution. Some banks  are  pulling in the opposite direction,  working to counter a global tide demanding that they be removed from the head of the table.

Cryptocurrency symbolizes a changing tide JP Morgan Chase simply cannot outsmart. Something is #happening.