JPMorgan Chase is quietly offering blockchain remittances to 2,200 clients

JPMorgan Chase & Co. is quietly testing technology that supports bitcoin, the dollar currency, in London and Tokyo as it seeks to boost spending and counter threats from Silicon Valley.

Daniel Pinto, head of JPMorgan Chase and investment bank, said:

In recent months, the country's largest bank has been applying bitcoin's blockchain technology to its US dollar remittance business between the two financial centers for 2,200 customers and studying its operation. The bank wants to understand whether blockchain technology, also known as distributed ledgers, can be used for currency settlement to make customer funds turn over faster and the bank less risky.

JPMorgan Chase may begin applying blockchain technology to its actual business this year.

JPMorgan Chase and other big banks are grappling with threats from internet-based lenders and payment systems, including those using bitcoin and blockchain. JPMorgan is cutting fees, reducing staff and shrinking assets to adapt to slimmer profit margins and stricter regulations.

The bank has been hurt by slowing global growth, disruptions in the energy sector and persistently low interest rates. Technological advances may not ease investor concerns anytime soon. JPMorgan Chase shares are down 11 percent so far this year, compared with a 15 percent decline for the KBW Nasdaq Bank Index.

Mr. Dimon has been keen to discuss technology developments. Last year, he warned in his shareholder letter:

Silicon Valley has arrived, bringing with it hundreds of smart and financially capable startups that can disrupt the traditional financial industry.

Late last year, he told an investor conference:

While Bitcoin may not be around for long, its core blockchain technology could be very useful for tracking securities ownership and shortening the time it takes to make loans.

Sanoke Viswanathan, Chief Administrative Officer at JPMorgan Chase, said:

We intend to extend the testing to real transactions in the new blockchain project. But first we need to spend several months to obtain regulatory approval.

JPMorgan is also involved in industry groups working to use blockchain technology to improve the efficiency of trade lending, including R3, the nonprofit Linux Foundation and Digital Asset Holdings, led by former JPMorgan executive Blythe Masters.

Matt Zames, the bank’s chief operating officer, said:

At the same time, JPMorgan Chase plans to increase its technology investment by $9.4 billion in 2016, compared to about $9.2 billion last year, and allocate 40% of the budget to new investment projects and technology, compared to the current 30%.

The above includes investment in new business partners. The bank launched a cooperation with Deck Capital Inc, an online small loan company, last year and will absorb more partners in the April plan.

Matt Zames, COO of Bank

Matt Zames says:

Banks are scaling back on current technology, including reducing the real estate where their tech workers are housed, trying cheaper servers and cutting back on older applications and tech service providers.

The bank is also investing heavily in internet security, planning to spend $600 million this year, compared to $500 million in 2015. The bank lost contact information for 76 million households in 2014. But no account information was stolen.

JPMorgan Chase's 40,000 technologists make up 17% of the bank's staff and are led by global chief information officer Dana Deasy. According to people familiar with the matter, the R&D staff now has 18,500 people, a 10% increase.