J.P. Morgan Interview
16 December 2016
Leslie Holstrom speaks to Jeff Bosland, Global Head of Treasury Services, J.P. Morgan.
What are the top three client-side trends in transaction banking that you are focusing on?
J.P. Morgan clients have always looked to us for global cash management solutions, advisory and thought leadership, and we spend a lot of time discussing the ways we can partner with them to drive operational and cost efficiencies, optimise return on liquidity in a complex regulatory and low-rate environment, and increase visibility and control for managing familiar and emerging risks. Across corporates, efficiency is a strategic initiative that now extends into treasury, and we are helping clients centralise their operations regionally and globally. We have enhanced our on-behalf-of and payment factory solutions as a means for clients to rationalise their accounts and relationships, improve reconciliation and optimise working capital. From a liquidity perspective, clients can minimise their idle cash positions using our new automated solutions that are tied to cash concentration structures. We are particularly excited about our cross-currency and just-in-time sweeps, which eliminate the need for clients to hold excess or residual balances in local currency accounts. Finally, risk management today means more data-driven decision-making and heightened cyber security. We are delivering on both fronts by capturing the right information, surfacing meaningful insights and giving clients access through channels that are safe and sound.
What are the top 3 trends that are affecting the banking sector and how are those effects manifesting themselves?
We are seeing a convergence of the new and old when it comes to banking trends, making it an opportune time for corporates to evaluate their approach and their partners. First, technology innovation is bringing advanced capabilities like cloud services, robotic process automation, big data and analytics, APIs and distributed ledger technology to finance. These will be key enablers for banks to increase agility, reduce costs and enhance efficiency. This is already evident on the retail side where consumer expectations for real-time anything is influencing wholesale product development. Take payments, for instance, where the race to execute real-time transactions coupled with pressure to create ubiquitous systems are making immediate payments a near-term reality. What has not changed is the risk and regulatory agenda, but the angle is different now that the role of the treasurer has expanded, regulations have grown increasingly complicated and fragmented and cyber criminals work around the clock to refine their attack methods. Whether it is the new impacts of Basel III on liquidity views and the valuation of cash positions or ongoing efforts to tackle cyber fraud, banks must ensure that our infrastructures are nimble, secure and resilient in order to stay competitive.
How are these client-side and bank-side trends affecting the way you offer and price your services?
J.P. Morgan is committed to delivering strategic value beyond the transactional level as the globalisation of corporates has transformed the selection of a banking provider into a decision with a large stakeholder group, broad scope and wide organisational impact. We are differentiating from competitors by offering solutions that empower our clients to protect, manage and grow their businesses, in particular, partnering with them to achieve their cross-border objectives. Moreover, we ensure that those solutions are delivered on a platform of service excellence so that our clients can consistently count on us to make things as fast, easy and transparent for them as possible.
We are truly focused on the entire client experience, starting with making it as seamless as possible to switch to J.P. Morgan with minimal cost, resourcing and disruption. Once onboarded, clients benefit from our integrated solutions that align with their treasury processes. We encourage clients to pair operating services with operating cash so that as their payments and liquidity provider, we can help to minimise their risk, reduce reliance on daylight borrowing and maximise returns. In turn, sending us more payments means clients can reap additional value from the increased data and actionable insights we provide to greater efficiencies that arise from netting opportunities we identify.
In particular, how have you altered your product mix, your pricing and which regions/countries you offer your products? How have these changes been received by your clients?
J.P. Morgan takes significant measures to ensure that our product mix, global capabilities and pricing are in step with client needs in the current environment. Regionally, we continue to build our country capabilities so that we can serve our clients where they do business and help them operate across borders. These enhancements have accelerated our shift to a more holistic pricing model that is based on a market-basket of services. We are actively engaged with more clients, sharing ideas on how they can optimise their treasury potential.
Are you finding that internal technology issues (silos, legacy systems, unavoidable complexity) create a disadvantage in competing with FinTech companies?
J.P. Morgan is adopting a thoughtful approach in leveraging the full scale of our resources as we develop and integrate financial technology innovations through build, buy and partnership options. For example, our recently launched In-Residence program gives start-ups and entrepreneurs the physical space, access to J.P. Morgan experts and other resources to develop their ideas and collaborate with us on execution. Another example is our Blockchain Centre of Excellence located in Brooklyn, New York where a dedicated team of engineers is investigating applications for blockchain distributed ledger technology.
Now that so many FinTech companies have secure, interesting and fast products, what do you see happening to banks in the corporate space?
While new entrants can invigorate sectors, it is important to differentiate between what FinTech companies do and what banks do. FinTech companies are innovating around treasury processes to address specific pain points, while banks are enhancing the value proposition of our core end-to-end offerings. A concrete way to understand this key difference in the treasury space is to consider ERP systems. A FinTech company may deliver bolt-ons to link data and flows for corporates, while J.P. Morgan is launching ways to more seamlessly integrate with our clients’ ERP systems. More broadly, J.P. Morgan will continue to be a global full-service provider of cash management, liquidity, trade and escrow solutions so that we can meet the diverse needs of our clients.
Treasurers are now extremely cybersecurity conscious. Is this having any effect on your transaction management business? What about the so-called 'SWIFT hacks'?
J.P. Morgan invests $2 billion in technology security and controls and more than $600 million in cyber capabilities – to deliver safe, secure solutions to our clients. We continue to train our people, strengthen security measures, enhance standards and integrate our operation centres with core business processes. For example, we have added controls that help our clients monitor and protect their payments without sacrificing time and convenience. In addition to building a world-class cyber security foundation, we spend considerable time and effort in raising client awareness. As cyber threats evolve, we provide education, share best practices, and help clients make informed decisions about the security of the solutions and providers they select. If issues do arise, we are on hand to help them reach a resolution.