Silicon Valley Bank | October 11, 2023
A Silicon Valley Bank sign, coinciding with a government-assisted sale in mid-March, prompts enhancements to its resilient payment platforms.
Responsible for SVB's client-oriented payment solutions, Gagan Kanjlia pinpointed real-time payments and integrated payments as critical areas of emphasis on SVB's agenda.
SVB joined the Clearing House's real-time payment network in October 2022, enabling instant receipt of payments. By late 2023, clients can also send payments through RTP.
Following its acquisition by First Citizens BancShares Inc. after a crisis in March that saw it as the 19th-largest U.S. bank by assets, Silicon Valley Bank (SVB) is now gearing up to enhance the capabilities of its payment platform.
According to Gagan Kanjlia, the bank's Chief Product Officer, SVB's digital payment system has successfully handled a surge in payment inquiries during the crisis by scaling up to meet the increased demand. Under its new parent company's direction, SVB aims to strengthen and expand the platform's features, underscoring its commitment to delivering robust financial services.
Customers withdrew $42 billion recently, equivalent to 25.3% of Silicon Valley Bank's total deposits. The Federal Reserve reported that the anticipated withdrawal rate increased to 60.2% a day later, surpassing one-day withdrawal rates in other significant bank failures. These deposit outflows severely impacted SVB's financial position. Consequently, the bank initiated measures to reinforce its payment systems and ensure its technology infrastructure and vendor capabilities were equipped to handle the substantial volume of fund transfers.
Gagan Kanjlia affirmed that while the action did contribute to the outflow of funds, it was a decision made in the best interests of their clients.
The swift outflow of funds at SVB raised industry-wide concerns, leading banks to re-examine their risk control procedures in the digital banking era. However, SVB remains undeterred and continues to advance its payment platform.
Gagan Kanjlia said, "Real-time payments is going to be more inexpensive on a fully loaded cost basis. Because it results in less inquiry, less confusion between multiple parties." He added, "That's actually a good thing for both sides."
[Source – S&P Global Market Intelligence]
Responsible for SVB's client-facing payment solutions, Gagan Kanjlia pinpointed real-time payments and embedded payments as critical priorities for SVB. It has been active on Clearing House's real-time payment network (RTP) since October 2022, enabling its customers to receive instant payments. He further noted that by the end of 2023, customers will also be able to initiate payments on RTP.
In August, SVB took a strategic step by appointing Martin Murrell as Head of Global Payments and Milton Santiago as Head of Global Digital Solutions, marking the beginning of a collaborative roadmap with First Citizens. Real-time payments are a central focus of this initiative, with plans for seamless integration into SVB's digital system. The bank has established a substantial capital buffer to ensure robust liquidity and capital levels.
By the first quarter of 2024, SVB customers can initiate instantaneous payouts through RTP via the bank's API banking channel. Furthermore, SVB is poised to provide instant settlement services for merchants working with payment facilitators, prompt loan funding, and disbursements, including early wage access. The bank remains steadfast in its commitment to implementing FedNow, the Federal Reserve's real-time payment network launched in July.
JPMorgan Chase & Co. | September 13, 2023
JP Morgan aims to expand its blockchain efforts with a new blockchain-based digital deposit token.
Deposit tokens are digital representations of bank-held deposit claims, enabling swift transactions through blockchain technology for instant settlements.
In 2022, the bank carried out a trial, issuing deposit tokens as a component of Singapore's Project Guardian, and subsequently emphasized their potential in a recent study.
JPMorgan Chase & Co., one of the leading financial institutions globally, is currently in the initial phases of considering the development and implementation of a blockchain-based digital deposit token. The primary objective of this strategic initiative is to enhance and expedite the traditionally complex, delayed, and inefficient process of cross-border payments and settlements.
The bank has embarked on comprehensive preparatory efforts to establish the essential infrastructure for its envisioned blockchain-based digital deposit token. These preparations encompass the development of a robust blockchain network, ensuring scalability and security, as well as the creation of a seamless digital architecture for token issuance and transfer. However, JPMorgan's ability to secure the necessary approvals from regulatory authorities within the United States, where it is headquartered, ultimately determines the deployment of this transformative financial instrument.
JPMorgan’s representatives addressed this advancement by highlighting the potential benefits of deposit tokens and the cautious regulatory approach required before introducing any new financial product. They also revealed that the bank has proactively prepared its blockchain infrastructure to support the swift launch of deposit tokens. This strategic move underscores JPMorgan's commitment to innovation, operational readiness, and ability to adapt to regulatory requirements, marking a significant step in its ongoing pursuit of financial innovation.
This action marks a significant broadening of JPMorgan's engagement with blockchain technology, highlighting the bank's leading role in Wall Street's ongoing endeavors to harness blockchain's potential for simplifying complex banking procedures. JPMorgan's persistent commitment to exploring blockchain applications in finance reflects its proactive approach to technological innovation. By expanding its blockchain initiatives, the bank reasserts its dedication to remaining at the forefront of adopting cutting-edge solutions to address the intricate challenges within the financial sector.
In addition to this new initiative, JPMorgan has already developed several applications leveraging blockchain technology; one notable example is JPM Coin, introduced in 2019. JPM Coin facilitates the seamless transfer of dollars and euros among select JPMorgan corporate clients within the financial institution. As of June 2023, the bank reported processing approximately USD 300 billion in transactions through this system since its inception. Besides, JPMorgan manages US dollar transactions amounting to USD 10 trillion daily.
Compared to JPM Coin, the proposed deposit token serves a unique purpose. It is designed to facilitate effortless fund transfers to clients of other banks and is particularly well-suited for settling transactions involving tokenized securities or financial instruments issued on a blockchain. Like JPM Coin, its infrastructure will seamlessly integrate with the bank's existing compliance systems, guaranteeing adherence to crucial protocols such as KYC procedures, anti-fraud measures, and regulatory reporting obligations.
BNY Mellon | September 11, 2023
BNY Mellon and Trustly have joined forces for an open banking payment solution with guaranteed settlement.
This open banking payments solution ensures a smooth user experience and guarantees funds for business receivables.
Bankify integrates BNY Mellon's proficiency in transaction payments with Trustly's prominent open banking capabilities.
Bankify, BNY Mellon's latest innovation, introduces an open banking payments solution designed to streamline the process of accepting payments directly from consumers' bank accounts, making it more convenient for organizations. It represents a pivotal stride forward in modern finance, designed with meticulous care to simplify and optimize payment interactions.
BNY Mellon clients will now have the power to empower their end-users with a straightforward method for conducting transactions directly from their bank accounts, presenting a viable and enticing alternative to credit cards, debit cards, and third-party payment platforms.
Bankify's innovation is not confined to a single niche but embraces the entire digital finance ecosystem. Its meticulous design ensures that it caters comprehensively to diverse payment needs, offering simplicity, security, and choice. By bridging the gap between traditional banking and the dynamic world of digital finance, Bankify streamlines payments and enhances customer experiences. It stands as a testament to BNY Mellon's forward-thinking approach and dedication to pushing financial technology's boundaries.
"Bankify moves the needle for the payments industry in both the depth of the solution and the diverse range of organizations it can support," expressed Jennifer Barker, Global Head of Treasury Services for BNY Mellon.
[Source: Cision PR Newswire]
Jennifer's emphasis on Bankify's capabilities underscores its remarkable versatility and effectiveness across various sectors of the financial industry. Bankify's account linking and settlement guarantee features stand out as powerful assets in a wide range of scenarios. Whether a merchant seeks cost-effective payment processing, a biller aims to modernize customer interactions and secure banking data sharing, or a brokerage firm requires guaranteed settlement for instant fund access during enrollment, these features provide significant benefits. They streamline operations and greatly enhance an organization's overall financial performance, highlighting Bankify's profound impact on the financial spectrum.
Meanwhile, Alexandre Gonthier, Founder and CEO of Trustly, Inc., also highlighted the driving force behind the collaboration with BNY Mellon. The shared dedication to advancing the payment industry and establishing a fresh, open banking-based standard for consumer and business payments has been a central driving force. This partnership underscores a shared belief that consumers should have access to a financially responsible payment method while merchants stand to gain valuable insights from open banking-enabled data.
Nevertheless, the essence of Bankify lies in its versatility, accommodating a broad spectrum of consumer-to-business payment scenarios, including merchant payments, bill settlements, and the funding of digital wallets or accounts.