Treasury Today Country Profiles in association with Citi

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Next generation in treasury and trade

Digitisation promises to revolutionise financial services, transforming the landscape and ushering in a brave new world of automation and efficiency across cash and trade. Treasurers are already reaping the benefits of this, but there is more to come. Here, J.P. Morgan’s Manoj Dugar and George Fong outline the steps that the bank has already taken to digitise itself and the solutions it offers its corporate clients and what will be next.

Portrait of Manoj Dugar

Manoj Dugar

Managing Director, Head of Core Cash Management Product, Asia Pacific, Treasury Services
Portrait of George Fong

George Fong

Managing Director, Head of Trade & Loan Product Management and FI Advisory, Asia Pacific, Global Trade & Loan Products

What impact is digitisation having on corporate treasurers and corporate finance more broadly?

Manoj Dugar (MD) – Digitisation is having a huge impact on the expectations that corporate treasurers have, in respect to the solutions they require and how they want to interact with their banking partners. Today, banks must be able to deliver customised products and bespoke advisory that meets the ever evolving needs of their clients at a quicker pace, with more flexibility and at a lower cost than ever before.

At J.P. Morgan, we recognise this trend and have placed a significant focus on, and are investing heavily in, digital solutions and expertise across all lines of business to help meet the evolving needs of our clients.

But simply digitising legacy solutions and processes is not all that is required to truly enhance our value proposition. It is therefore incumbent on financial services to use technology to enhance the experience that corporates have when interacting with banks, re-imagining processes and ensuring that all of our services meet the needs of business in the 21st century.

George Fong (GF) – I agree that digitisation is incredibly important to our clients. From a trade perspective, the pace of change with respect to digitisation in the industry has remained relatively slow for some years now so there are many areas where corporates can leverage technology to streamline and standardise their own internal processes in an effort to reduce processing costs.

Technology also promises that businesses will be able to have a wealth of real-time information at their fingertips. Yet, the industry has evolved in such a way where this is still not attainable for all. It is vital therefore, that we as an industry ride the waves of the digital revolution and come together to drive standardisation. This will help to ensure that corporates are able to obtain rich, detailed and real-time information over their transactions, no matter which institution they choose to work with.

Are you able to highlight some of the key innovations that you have been working on across cash and trade in recent years?

MD – Digital efforts to help our clients overcome their challenges have been ongoing for some time here at J.P. Morgan. We have already made great strides in many areas and built pioneering solutions such as AccessFX, which helps our clients optimise their account structure, liquidity management, and streamline the transactional execution of cross-currency payments. In addition, we are focusing on our local payment capabilities to ensure that our clients have an automated, trusted and regulated mechanism for processing their payments.

We have also developed a pioneering virtual branch solution, which delivers the full-suite of services that a corporate may expect to receive in their local branch from the comfort of their office or wherever they may be. This solution enables corporates to obtain the services they need in a much quicker, more efficient and flexible fashion. It was first launched in India earlier this year and will be rolled out to other markets in due course.

Supporting inventive and technologically advanced front-end solutions such as this is a highly automated and efficient back-end. In recent years, we have been implementing various robotic apps and machine learning engines that can process instructions in an automated fashion, significantly enhancing the efficiency and productivity of the bank. Investments such as this in the back-end, whilst perhaps not as eye-catching as front-end solutions, are vital to ensure that we are able to deliver new solutions to our clients, lower the cost of these and also significantly improve the clients’ experience when they deal with the bank.

GF – Building on these improvements in the back-end, we have also been able to look to solve many of the pain points that currently exist around trade finance. The document fulfilment process, for example, remains arduous and dominated by paper and this is an area where we are seeing a particularly strong client demand for digital solutions.

The Bank Payment Obligation (BPO) is a product that has the potential to solve this challenge. Although the product has existed for some time, its value proposition has been enhanced greatly in recent years through companies such as essDOCS providing the framework for digital document exchange, meaning that banks are now able to offer their clients a truly digital end-to-end trade finance product that mitigates risk and facilities financing in addition to the exchange of electronic documents. We are currently working with a number of clients around this solution and believe that it has great potential.

Furthermore, to solve the issues that many corporates face around the lack of multi-banking standards, we are working with numerous technology companies to see how their platforms might be able to better facilitate multi-banking over a bank’s propriety system. We have also been working with SWIFT to further develop their corporate trade solution and have already made numerous transactions with clients using this solution.

What is your view on the potential of the blockchain to revolutionise cash and trade?

GF – Blockchain clearly has great potential, but like most other financial institutions, we are currently in the preliminary stages of experimenting with it to find viable uses that will truly benefit our clients. The transfer of title and portfolio risk management – where trade assets are bought and sold – is one area in particular that looks very promising and fits the blockchain model very well. But it will take more time before this can be commercialised.

MD – To echo what George said, blockchain is a very exciting area and it is difficult to have a conversation today without it being mentioned. We recognise its potential and are positioning ourselves to take advantage of it and have established a dedicated blockchain centre of excellence that is experimenting with the technology to see where it can have an impact across all of our business lines.

From a treasury services perspective, our chief area of focus is seeing how blockchain can enhance the transfer of value within the bank. At present, we are looking to leverage the distributed ledger technology to make instant 24/7 payments across J.P. Morgan’s books to simplify the payment process for our clients in real-time. The goal being to increase the speed and accuracy of the settlement process and mitigate risk.

How does the bank plan to keep ahead of the technology curve moving forward and what makes your approach to this topic unique?

GF – The pace of change has picked up considerably in the banking industry recently. It is therefore vital that we keep investing in our solutions and people to stay ahead of the curve.

But more importantly, it is crucial to remember that technology is not a panacea, or something that is there to make more money for banks: it is a tool that enables our clients to perform better. We must see this as an opportunity to listen to the client and not be dogmatic in our approach, to work with them to build the solutions and offer the services that they require.

MD – I agree; digitisation should not be viewed by banks in isolation. It is about understanding the clients’ end-to-end transaction flows, where the pain points are, and then finding ways that technology can remove these, even if this means completely moving away from legacy processes that have stood the test of time.

This matches our ethos as a bank. We are focused on disrupting the way that things are done to ensure that our clients are able to fully benefit from new technology.

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