JPMorgan Chase Patents Blockchain Technology For Tracking Auto Dealer Inventory
JPMorgan Chase, a financial powerhouse with assets in excess of USD 2.76 trillion, has patented a blockchain-based technology that facilitates a distributed ledger version of floorplan lending.
Essentially, floorplan lending allows auto dealers to put up their car inventory as collateral for a revolving line of credit. However, this can be an arduous process for the bank, since agents have to be physically sent to auto dealerships to verify the collateral. Also, sometimes auto dealers pledge a car as collateral to one bank while pledging the same car as collateral to another bank as well. This is called ‘double flooring’, and whether this is intentional fraud or an accident, it can cause unexpected losses for banks.
JPMorgan’s patent proposes using the Quorum blockchain to store the vehicle identification number (VIN), as well as information from a range of sensors on the car including geolocation. This will not only cut costs since a physical agent will no longer be necessary to verify that the car is there but also if all of the banks cooperate and use the same blockchain, then this system has the potential to completely eliminate double flooring.
This is the first time that JPMorgan’s Quorum blockchain has moved beyond abstract financial operations. Previously Quorum had been primarily used for issuing debt and linking bank networks.