JPMorgan wants to it keep track of the automobile inventory it finances for car dealers – and prevent them from pledging the same cars for different loans.
Chase Auto, the bank’s wholesale car financing arm has filed a patent application describing a distributed ledger-based version of floorplan lending, a revolving line of credit that allows car dealers to borrow against retail inventory.
Track Vehicle Identification Number
Every car has an individual vehicle identification number (VIN) . The bank reckons that these can be anchored to a blockchain. The application is a blockchain version of floorplan lending, which will enable car dealers to take loans against their retail inventory. Floorplan lending process is a way of carrying out physical checks on all the inventory on a dealership’s lots, periodically.
Also, the bank aims to use the new application to eliminate inefficiencies that are associated with auditing a dealer’s inventory by linking a car’s vehicle identification number (VIN) to the blockchain and it firmly believes will bring about substantial cost savings over time since there are millions of new and used cars that are part of the floorplan lines of credit.
According to blockchain lead at JPMorgan, Christine Moy, the application is being tested with real dealership partners, but not in production yet.
Explaining how the use of blockchain technology will be beneficial to the system, Moy noted that it helps to prevent double flooring.
“Double Flooring” is an event where a dealership pledge one vehicle as collateral for one floorplan contract to one bank, yet pledge the same collateral for another floorplan contract with other bank.
According to Moy, while JPMorgan and Chase Auto seeking to solve its own problem, they are also looking to add value to the vehicular and equipment industry at as a whole.