New technology promises new opportunities for organisations to optimise cash and payments – but as banks invest in innovation, client relationships are more important than ever, explain J.P. Morgan’s Bruce King-Shey and Sarah Olsen.

Sarah Olsen

Head of Business Development for Coin Systems at Onyx by J.P. Morgan

Bruce King-Shey

Executive Director, Design Strategy for the bank’s machine learning product team

During the COVID-19 crisis, many treasury teams have been able to step up and support their organisations proactively – but many others continue to face challenges as a result of technology constraints. “A lot of people still have trouble just getting the data they need and organising it,” says Bruce King-Shey, Executive Director, Design Strategy for the bank’s machine learning product team. “If a treasurer asks their team a question, they can find that four different people give three different answers.”

Emerging technologies can offer new opportunities for treasurers to access, interpret and enhance data and use it in a more strategic way. “We service clients around the world that have really complicated needs,” says Sarah Olsen, Head of Business Development for Coin Systems at Onyx by J.P. Morgan, a new division focusing on blockchain and digital currency initiatives within the bank’s Wholesale Payments business. “Our clients are exploring technologies such as blockchain, Internet of Things (IoT), Artificial Intelligence (AI) and quantum computing, as well seeking to connect to platforms more seamlessly via APIs – so the demands from our clients for technical acumen are higher than ever.”

These technologies offer new opportunities to predict the future or optimise cash – but the need to understand these developments also places further demands on treasurers. As King-Shey points out, while the core job of the treasurer is to manage cash, “suddenly they’re forced to become technologists.”

Collaborating and connecting

Collaboration can be a powerful tool when it comes to developing new solutions – and alongside in-house technology development, J.P. Morgan is pursuing a growing network of alliances with over 100 fintechs. Olsen says that this enables the bank to harness emerging financial technology “in a way we otherwise couldn’t”, as banks and fintechs each have something different to bring to the table.

For one thing, while large banks have the benefit of a strong client base, fintechs typically have more flexibility when it comes to developing new solutions at speed. Another difference is that fintechs tend to focus on improving the end user experience, while money continues to move on traditional rails. “Because we’re a global bank, the way we approach these problems is more fundamental when it comes to building better solutions at the money movement level,” Olsen explains.

Human-centric approach

As technology becomes more sophisticated, the need for strong relationships remains key. “Human relationships are still so important,” says King-Shey. “Treasurers would rather come to their banking partner when they are considering new tools, because they’ve spent time building that relationship – whereas a fintech is a company that is selling a technology solution.”

That’s not to say those relationships should be taken for granted. King-Shey says that when it comes to working on data initiatives, “we have to work very closely to understand their process, their data needs, where there are challenges in their system.”

Olsen agrees: “When we’re building new technology, whether in-house or by working closely with fintechs, we want to make sure we are taking a client-first approach – that we’re building things our clients want, and addressing their needs in a real and holistic manner.”

Investing in innovation

With annual firmwide technology investment of over $10 billion, J.P. Morgan takes a proactive approach to developing digital treasury and payments solutions. As well as supporting decision-making and liquidity management with solutions like Virtual Account Management, the bank was the first to issue a digital coin (JPM Coin). Also notable is the development of Liink, a scalable peer-to-peer blockchain-based network designed to ease cross-border transactions and now part of the Onyx business.

Looking forward, King-Shey says the data team is currently working on a machine learning application that will enable companies to enhance their cash flow forecasting processes. “Forecasting is the number one challenge for most treasury organisations, and we heard that loud and clear,” he says. “We’re excited to be using our capabilities to create an app that will help our clients forecast better.”

Olsen, meanwhile, explains that Onyx is looking closely at how money and data moves at the commercial level between financial institutions, fintechs and corporations in order to improve the flow of data and value across networks. “Liink and Coin Systems are both great examples of how J.P. Morgan is using distributed ledger technology to facilitate better data and value transference,” she says, adding that the team is also exploring use cases outside of payments, such as IoT and identity.

What’s clear is that innovation is a continuous exercise. As Olsen concludes: “In order to compete, we need to push the boundaries of what’s possible, while meeting our clients’ expectations – and their expectations will only continue to grow as technology evolves.”