According to JPMorgan, blockchain can aid in keeping track of automobile inventory it finances for car dealers. It can also prevent pledging the same car for different loans.

The bank’s wholesale car financing arm has filed a patent application describing a distributed ledger-based version of floor lending, which allows car dealers to borrow against retail inventory.

All the cars sold in the U.S have unique individual vehicle identity number (VIN) assigned to them. The bank reckons that these can be fixed to a blockchain, with the aid of other telematic and geolocation sensors which are able to remove inadequate manual pain points around auditing inventory on the dealership floor.

Kelvin Point, head of research and development at Chas Auto, states that the floorplan lending process involves periodically conducting an audit or a physical inspection of all inventories on the dealership’s lot.

Some banks such as JPMorgan have been putting in so much effort for several years to build blockchain systems. Currently, it is looking for practical ways by which blockchain can improve their results.

Point claims about 17 million new cars are sold in the U.S each year. In addition, when used vehicles are added, there are millions sitting on floorplan lines of credit. He added that, tracking of a distributed ledger will help achieve cost savings over time.

The move is a slight deviation for the Quorum blockchain which is a private variant of Ethereum developed by JPM. In the past, Quorum was only used for financial operations, issuing debt or linkage payment networks of corresponding banks. On the other hand, the new Chase Network of Assets involves verifying physical objects.

A blockchain lead at JPMorgan, Christine Moy, said it can be described as a pilot since its still being tested with real dealership partners and not in production yet. She added that the scope of Network of Asses could be broadened and that JPMorgan wants to partner with automakers about the blockchain system, but she wouldn’t disclose their names.

Moy stated that, this initiative will not only help to solve JPMorgan and Chase Auto’s problem but will also be of great benefit to the vehicular and equipment industry too. The Network of Assets is the foundation for this use case. It can also act as a foundation for many services and value-added applications for banks, manufactures, financial companies and dealership which use telematics connectivity.

Moy stated that the DLT system prevents ‘double flooring’. This is a dealership in which one person intentionally or unintentionally pledges a car for collateral for one floorplan contract to one bank, but also uses the same vehicle as collateral for another bank.

JPMorgan Quorum efforts are well established, backed by a great community around the technology, interoperability and tokenized payment systems like the JPMCoin.

Due to the unique features and telematics, the auto industry will be a great way to increase adoption and lead to efficiencies in other areas of finance.

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