JPMorgan, a New York-based financial services holding company, has turned to Blockchain technology to make its automobile inventory procedures more efficient and more accurate.
According to reports, the company’s subsidiary for wholesale car financing, Chase Auto, has applied for a patent. The document describes a DLT (distributed ledger technology) – based floorplan lending, a line of credit that revolves and enables automobile dealers to borrow money against retail inventory.
According to CoinDesk, JPMorgan plans to anchor every vehicle’s unique identification number to a Blockchain. The system would be supported by geolocation and telematic sensors, which would eliminate inefficiencies caused by manual auditing on the dealership floor.
Chase Auto’s chief of research and product development Kevin Point explained the procedures of floorplan lending require an inspector to conduct a physical visit on the dealership’s lot. Then, the vehicle would be identified, and the inspector would reconcile that inventory to verify if there’s an outstanding loan on the accounting systems of the dealer and the bank.
JPMorgan claims that the new private Blockchain would prevent the dealer from pledging the same vehicle for different loans. As stressed by Point, around 17 million automobiles are being sold in the US each year. When that figure is added to the existing number of vehicles sitting on the company’s floorplan lines of credit, the auto inventory process would require a massive amount of time, effort, and costs.
Notably, the last few years had been spent by JPMorgan in exploring Blockchain-based solutions that would enhance its operations while effectively lessening the costs. The new private Blockchain demonstrates the company’s intent to depart from the Ethereum-based Quorum Blockchain.
JPMorgan relies on Quorum for its abstract financial operations, such as issuing debt and connecting correspondent banks’ payment networks. Meanwhile, the new Blockchain dubbed Chase Network of Assets involves the verification of physical objects.
The Blockchain chief at JPMorgan, Christine Moy, confirmed that the private Blockchain had entered the testing phase with the bank’s existing dealership partners. However, she clarified that the company is yet to authorize production.
Moy also revealed that JPMorgan targets to get suggestions from automakers to further enhance the system. However, she declined to provide further details about the plan. Instead, Moy touted that Chase Network of Assets would not only help solve the company’s persisting problem in terms of auto inventory, but it would also benefit the automobile industry as a whole.
Aside from avoiding a bad industry practice dubbed double flooring, Moy emphasized that banks, finance companies, manufacturers, and dealerships can benefit from value-added applications associated with telematics connectivity.