JP Morgan Identifies Three Companies Whose Stock Could Benefit From Blockchain

Investment bank and financial services firm J.P. Morgan Chase has identified three public companies whose stock it believes will benefit from their applications of blockchain technology, CNBC reported Nov. 8.

In a note to clients, J.P. Morgan reportedly forecast that IT companies will deploy blockchain in the same way that many firms claim to benefit from machine learning and artificial intelligence (AI). Some companies have started to drop using the term “blockchain,” as they believe the word is overhyped and too often used as a marketing ploy.

However, J.P. Morgan outlined three companies that will purportedly create “material incremental growth opportunities” from the technology.

Per J.P. Morgan, those beneficiaries are American content delivery network and cloud service provider Akamai Technologies Inc., San Francisco-based tech and digital transaction management services firm DocuSign, and cloud-based platform provider for the mortgage finance industry Ellie Mae.

J.P. Morgan recommended that investors “should be looking to identify where the opportunity to replace a middleman is the biggest, or where trust is needed where none exists, or what companies are the best positioned to offer blockchain as a service (BaaS).”

Software equity research analyst at J.P. Morgan Sterling Auty explained how each firm fit J.P. Morgan’s criteria. Auty reportedly said that Akamai could power its business through BaaS as many customers would rather use blockchain as a service than develop the technology from scratch.

DocuSign can already reportedly connect a blockchain network to its systems. Specifically, DocuSign aims to digitize the entire contracting process on its platform. “Over time we could see much of the platform being based on blockchain, basically shifting its centralized security model for the distributed model of blockchain,” Auty said.

Regarding the third company, Ellie Mae, J.P. Morgan said that real estate is the most “obvious” use case for blockchain. Auty reportedly commented:

“Utilizing blockchain to manage the entire mortgage process could bring trust among parties and use of smart contracts could help automate various tasks (inspection, income/employment verification.”

In October, a study of J.P. Morgan’s digital transformation initiatives revealed that blockchain is a key technology for the bank’s roadmap. The study covered the firm’s digital transformation roadmap, with blockchain listed as the first in a range of cutting-edge technologies that are being pursued by the bank — including big data, cloud, AI, and robotics.

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