JPMorgan Chase wants to use blockchain to keep track of the auto dealer inventory it finances, according to CoinDesk. The nation’s largest bank filed a patent for a ledger-based version of floorplan lending that would help it keep track of the cars it finances.
By anchoring vehicle identification numbers (VINs) to a blockchain, the bank said it can use the technology to help prevent fraud.
The technology is being piloted with JPMorgan Chase’s dealership partners but is not in production yet, Christine Moy, the bank’s blockchain lead, told CoinDesk.
The distributed-ledger technology system is meant to prevent double flooring, which happens when a dealership, accidentally or fraudulently, pledges a vehicle as collateral for one floorplan contract to one bank, and also pledges the same collateral for another floorplan contract with another bank.
Floorplan lending is a revolving line of credit that allows car dealers to borrow against retail inventory. It involves periodic physical inspections or audits of the inventory on the dealership’s lot, Kevin Point, head of research and development at Chase Auto, told CoinDesk.
“That means that a human being actually travels to the dealership, identifies the vehicles and then reconciles that inventory, if the loan’s outstanding, on both the dealer’s and the bank’s accounting system,” he said.
Tracking the vehicles on a distributed ledger “will achieve cost savings over time,” Point said.
JPMorgan Chase isn’t the first company to explore blockchain for floorplan financing. Tata Consultancy Services, a subsidiary of Tata Group, the Indian conglomerate that also owns Jaguar Land Rover, is looking at similar technology, according to CoinDesk.
JPMorgan Chase has had an interest in blockchain for some time, and is now finding ways to monetize the technology.
The bank created a division dedicated to emerging technologies such as blockchain in 2015.
The bank is also…