JPMorgan, the famous American multinational investment bank and financial services holding company has affirmed its belief in blockchain, mentioning, the technology can help keep track of the automobile inventory it finances for car dealers. As per JP Morgan, it will also help prevent them from pledging different loans for the same car.
A patent application was also filed by the bank’s wholesale car financing arm that lays out a distributed ledger-based version of floorplan lending, a revolving line of credit allowing car dealers to borrow funds against the retail inventory.
A car that gets sold in the US receives an individual VIN (vehicle identity number), and the bank looks forward to anchoring them to a blockchain. This process will further be assisted by a range of other Telematics and Geolocation Sensors. The use of these sensors is said to remove inefficient manual pain-points around the auditing inventory on a dealership floor.
According to the words of Kevin Point, head of R&D at Chase Auto, the floorplan lending process involves carrying out a physical inspection or audit of an entire dealership lot. This would mean a person is actually traveling to a dealership, identifying vehicles, and finally reconciling the inventory to determine if any loan is outstanding on the dealer’s or the bank’s accounting system.
Banks including JP, which have always been busy focusing heavily on testing and building blockchain systems for the past several years are now looking for practical opportunities that will help improve their bottom line.
“About 17M new cars are sold each year in the US, and when we add-in used vehicles, a million others are sitting on the floorplan lines of credit. Tracking them using a distributed ledger will help us save costs over time, an