#24 For Umar Farooq, being first and fastest to expand blockchain-based payments is critical

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A voracious reader in his spare time, Umar Farooq tends to focus on tomes describing the construction of the Brooklyn Bridge, Panama Canal, and other massive engineering projects, or biographies of up-by-the-bootstrap leaders such as Henry Truman and Tim Cook.

They provide perspective on how to pursue complex, large-scale and impactful projects, as Farooq integrates distributed ledger technology across J.P. Morgan's payments platform. Starting in 2014, he led the bank's Blockchain Center of Excellence that ultimately became Kinexys by J.P. Morgan. The internal blockchain unit's breakthroughs have been integrated along the way into J.P. Morgan Payments, a department Farooq now co-heads that generates $20 billion in revenue, has more than 30,000 employees, and offers merchant and treasury services, trade and working capital, and other payment services across 160 countries and 120 currencies.

"It's quite difficult to innovate in a disruptive manner the core product of one of the biggest payment platforms globally," Farooq said, noting that the blockchain advances must not only be delivered to thousands of clients globally but also comply with local regulations.

Nevertheless, the bank was one of the earliest to launch an internal, permission-based blockchain for institutional customers that moves more than $5 billion in business-to-business payments daily. A private version of the Ethereum blockchain, its programmable payments functionality enables clients, such as Siemens, to pre-define conditions to trigger complex transactions. Last May, Kinexys partnered with Chainlink and Ondo to settle in real-time tokenized U.S. Treasuries against USD deposits at the bank, connecting its internal digital payments network to public blockchains such as Ethereum.

In November, it launched JPM Coin, a USD-denominated deposit token, following a trial run with B2C2, Coinbase and Mastercard. Institutions can hold JPM Coin in their digital wallets alongside other tokenized assets and use it to purchase such assets. Banks can conduct cross-border transfers directly, in real-time and 24/7, without having to traverse traditional correspondent-bank chains.

Raj Dhamodharan, EVP of blockchain/digital asset products and partnerships at Mastercard, said the integration of Kinexys with Mastercard's multi-token network demonstrated how tokenized deposits can operate across networks.

"What stood out was not just the technology, but the way Umar and his team embedded programmability, real-time settlement and interoperability into a regulated banking framework," he said.

J.P. Morgan Payments transactions over public blockchains remain few, but Farooq sees them increasing in a "symbiotic manner" as market participants place more tokenized assets on blockchains.

"We felt like we wanted to get there first, so as the largest payments player we're well positioned," Farooq said. "We don't want to ignore what could be one of the largest future payment venues."