Despite the media flurry around digitalisation over the past decade, many of the big players within mainstream finance have shied away from the spotlight – but that doesn’t mean they’ve been lying idle.
JP Morgan, which arguably dominates capital markets, retail finance and a host of other areas, has been painstakingly preparing, ready to bring something that it thinks may change the game.
Leading one of the verticals, which maps into the broader JP Morgan plan, is Naveen Mallela, global co-head, JP Morgan Kinexys, a blockchain infrastructure “that reimagines the transfer of money, assets and financial information,” according to the bank.
Mallela, based in Singapore, has been working in this space for 10 years, primarily focusing on digital money, including JPM Coin, which is now integrated with digital payments. He was part of the team that launched, designed, built, and scaled it, alongside programmable payments, and has led much of the bank’s experimentation and thought leadership in CBDCs.
Today, he leads everything related to digital money within the bank and collaborates readily with capital markets colleagues, “since these use cases almost always intersect with digital payments and money”.
For Mallela, cross-border payments represent the next big opportunity for business and financial markets, and he sees it coming to fruition much more quickly than the decades some people predict.
“I believe it’s happening much sooner. In fact, in many ways, it’s already here,” he says. “Domestic payments have progressed to a 24/7 model, but cross-border transactions still hold immense potential for innovation, including the role of tokenisation.”
The evolution so far has largely been powered by the pre-funding model, where liquidity is maintained in multiple locations, explains Mallela. He uses a simple transaction between two counterparties – one in London, the other in Singapore – to demonstrate.
“Today, it appears instantaneous: money is debited from your account and credited to my account in seconds. But that happens because a service provider holds liquidity in Singapore and uses it for credit,” he says. “The actual transfer still follows traditional processes. Since Swift’s inception, cross-border payments haven’t fundamentally changed.”
Even when paying for coffee with a major credit card, merchants don’t receive funds instantly. Settlement cycles vary—T+1, T+2—and cross-border transactions are even more complex due to multiple intermediary banks. Payments often break.
“The promise of instant, peer-to-peer tokens is game-changing,” says Mallela. “Beyond stablecoins and deposit tokens, we’ve been working on bringing correspondent banking onto distributed ledgers, creating always-on systems to enhance efficiency.”
In fact, it’s been a focus for the past five years. In 2019, the bank launched JPM Coin—the first commercial bank money on-chain. Now, it spans multiple currencies, including USD, EUR, and GBP, actively used by institutional clients.
Changing the game
This flagship product enables 24/7, always-on programmable money with conditional payments. It connects to three verticals: money, information, and assets, which is key to the market evolution, according to Mallela.
“While money gets the most attention, information is crucial too,” he says. “Our Liink Network is a two-sided system, with inquirers and responders, ensuring compliance with travel rules and improving payment certainty. Many failed payments stem from incorrect account details, which is why our pre-validation solution enhances accuracy.”
Capital markets become part of the puzzle where instant payments require instant liquidity.
“Often, payments aren’t delayed due to infrastructure alone—banks may lack liquidity at that moment,” says Mallela. “That’s where tokenisation helps, enabling intraday repos, FX swaps, and precise liquidity provisioning.”
In banking, assets exist on one ledger, cash on another. Reconciling these takes a full day.
“Today, accessing short-term liquidity for just an hour or two is a challenge, but by integrating tokenised instruments, we’re addressing that gap.”
This is the promise tokenised payments offers its capital markets cousins, according to one of the sector’s largest players.
“Traditionally, liquidity has been managed on a ‘just in case’ basis—forecast your needs, ensure you have enough liquidity, and if you run short midday, you’re out of luck. You must scramble to find a source.”
Multi-asset ledgers and tokenisation introduce a new paradigm, however. Shared, programmable, multi-asset ledgers that integrate assets and cash on the same distributed system, that is.
“This allows transactions to be executed with precision and in short durations, fundamentally transforming short-term liquidity provisioning,” says Mallela. “It also opens the door to new equity marketplaces, which is incredibly exciting.”
This hints at why one of the largest equity origination and trading houses in the world has shown conviction to develop in this area – if not gone to town on the marketing yet.
“We were fortunate to be able to invest early,” says Mallela, citing a 2015 starting point. “Our approach was contrarian then, and in some ways, it still is, though less so as the landscape evolves.”
JP Morgan launched the world’s first enterprise blockchain platform, the first information network with Liink, the first repo transaction, and the first commercial bank money on-chain with JPM Coin. The bank cannot be accused of sitting back.
“Our goal was clear: to lead in this space,” he says. He notes the bank’s considerable – and enviable – “patient capital” as backing, but also the commercial pressures to ensure what it was pioneering was viable.
“Now, we’re seeing the rewards of that investment, and we’re at a point where we can start scaling these products commercially,” he says. “This is no longer just a proof-of-concept; our clients are actively using these solutions.”
Magnitudes of difference
These solutions include 24/7 FX, offering longer cut-offs for same-day currency settlement, which positions us ahead in an increasingly commoditised FX market.
“Speed, extended cut-offs, and advanced liquidity solutions differentiate us, attracting more volume to our infrastructure,” he says – but JP Morgan is looking further than just acquiring clients with this venture.
“We’re not focused on marginal improvements to user experience like fintechs—though those efforts are valuable,” says Mallela. “Instead, our work in distributed ledgers and blockchain is about rewiring the core financial infrastructure. That’s not something an outsider can easily do—it requires leadership from the largest and most influential players.”
The vision, then, from one of these players – through Mallela’s lens, at least – is the “Internet of Finance”, and he believes it is gaining traction.
“In 15-20 years, I see the world shifting towards a global ledger—moving away from multiple isolated ledgers across institutions to a single, worldwide system integrating assets, cash, and financial instruments.”
This shift, if it happens, will redefine business models. It won’t eliminate intermediaries entirely, but their role will diminish, he says.
“Since the 2008 financial crisis, there’s been a push to move transactions from OTC markets to exchanges and central counterparties (CCPs) to mitigate risk,” says Mallela. “CCPs have done an incredible job, but their model requires heavy capitalisation and tied-up collateral—resources that could be better utilised.”
With a unified ledger, financial institutions wouldn’t need intermediaries for every transaction, which would speed up cross-border and domestic payments. Technology—via atomic settlements or delivery-versus-payment mechanisms—could manage risk instead, effectively eliminating reconciliation.
“In a unified ledger world, would we still need Swift, Visa, or Mastercard? Theoretically, maybe not,” he says. “The path to this transformation isn’t entirely clear, but if we look at the destination, few would argue against where we’re headed.”
Furthermore, in a world of shared ledgers, traditional bank accounts may no longer be necessary.
“Why should funds be tied to a specific bank channel?” he asks. “Instead, you could hold a Barclays-issued deposit token or a Lloyds-issued liability in a universal wallet. If deposit tokens are widely adopted, they could function similarly to bonds.”
Liberating growth
Efficiency is just the first step, too. By liberating the need to pre-fund payments, current collateral pools could be used to fund growth.
“Instead of having capital and collateral locked away, there’s an opportunity to put them to productive use,” says Mallela. “In payments, to process £100 worth of transactions, you typically need about £20 of liquidity.”
By reducing – or even removing – the liquidity need, this cash is released back into the system.
“These capabilities enhance capital raising, making it more democratic and accessible from a broader range of sources,” says Mallela. “Additionally, the capital that is raised can be used more efficiently rather than being locked up for risk management or pre-funding. If this trend continues, it could drive significant new growth.”
Cash management could also evolve with the use of tokenised money market funds – and the assets held within them.
But this shift in infrastructure raises new questions. If banks operate on shared ledgers, competition won’t be about infrastructure anymore. How do banks differentiate themselves? How do they win in this new landscape? These are questions Mallela says JP Morgan keenly understands and is already working to answer.
“Shared ledgers inherently require banks to work together,” he says. “Historically, banks competed, but now collaboration is becoming essential.”
JP Morgan was one of the founding partners of Partior, which launched in 2021, alongside Deutsche Bank, DBS, Standard Chartered and Emirates NBD which collaborated to build the shared ledger infrastructure. It is headquartered in Singapore.
“It marked a shift in mindset,” says Mallela. “While each of these banks competes in various areas, we’ve collectively externalised intellectual property to create something industry-wide.”
The ask was considerable.
“Starting with a manageable scale was crucial—it had to be big enough to matter but small enough to function,” he says. “Looking at history, SWIFT, Visa, and Mastercard began similarly in the late ‘60s and ‘70s: a group of banks coming together to create infrastructure that ultimately shaped global financial systems. We see Partior following a similar trajectory.”
Elsewhere, Agorá, spearheaded by the Bank for International Settlements, involves seven central banks and 35 commercial banks collaborating on a shared ledger framework.
“It’s more extensive than what we’ve attempted, but it shows the momentum toward industry-wide cooperation,” says Mallela.
But let’s not forget that many of these institutions are commercial entities, with shareholders demanding return on investment. Collaboration with peers is important, but getting ahead of them is paramount, so how is JP Morgan planning its next move?
“Our focus is on scaling what we’ve built commercially,” says Mallela. “FX is a major priority, and expanding into additional currencies is a key objective. We’re also increasing engagement with financial institutions.”
In the Middle East, four of the five largest banks have joined Kinexys, JP Morgan’s platform designed for real-time clearing. Given the Middle East’s need for Sunday clearing, its 24/7 infrastructure naturally fits the market. Expanding currency coverage and onboarding more banks onto Partior are also top priorities.
“Beyond that, public-private partnerships will play a major role,” he says. “The work being done by BIS and central banks is critical. As with Visa, Mastercard, and Swift—initially private-sector initiatives that evolved into global infrastructure—banks must take the lead in shaping the next generation of financial systems.”
JP Morgan can’t slow down, either, as peers come to market with new ideas. Over the last few months, HSBC launched a tokenised deposit initiative. DBS, Citi and others have made similar moves.
“When we launched JPM Coin in 2019, we were pioneering in this space. Now, seeing more banks enter validates the path we’ve taken,” says Mallela. “It also reassures clients—they know it’s not just JP Morgan pushing this agenda; it’s a collective effort across major institutions.”
