Treasury technology is never far from the forefront of conversations today – and visitors to this year’s AFP Annual Conference in Boston would be hard-pressed to avoid it. The sheer number of fintechs exhibiting would have been unthinkable just a few years’ ago, while pretty much every one of the AFP ‘regulars’ is this year focusing on technology.
One financial institution drawing large crowds to check out its tech offering was J.P. Morgan, which has been busy in the treasury technology space recently. According to Martha Beard, Managing Director, there is good reason for this.
“I think we’re at a turning point in terms of treasury technology,” explains Beard. “There’s a lot happening around corporate treasury that will enable and change the way a corporate treasurer’s office works. Firstly, they’re going to have to respond to changes in the business models within their companies. They’re also going to have to respond to the fact that there’s connectivity everywhere, whether it’s the connected car, the connected consumer, or now, the connected treasury.”
Beard goes on to say that she thinks the practical side of the connected treasury must be addressed, but there are huge opportunities for treasurers and financial institutions alike.
“I’m seeing some exciting stories across the treasury space. At J.P. Morgan I think our technology focus is really starting to take shape, not least in the way we’ve taken all of our wholesale payment businesses and created a customer-centric payment company. As the business and consumer worlds evolve and technology becomes evermore central to everything we do in our lives, we’re bringing the two together in a payment business that reports to the heads of both our corporate investment bank and our consumer bank. That’s really important because of those drivers I mentioned earlier. The disruption in business models needs to go hand-in-hand with putting the customer first.”
Key technologies that are further enhancing this tech-led ‘revolution’ include open banking, faster payments and real time activity reporting through APIs. There’s also a drive within J.P. Morgan to connect the consumer payment experience to corporate treasury in order to boost customer service, enhance the experience for treasurers and give them access to more data than ever before.
“Let’s not forget that the corporate treasurer’s role as a risk executive is an extremely important one. What we’ve done is allow for that balance between financial risk management and the ability to enable and take advantage of connectivity. That means treasurers can respond to commercial initiatives and the commercial objectives in their company.”
One of the issues that’s often talked about in treasury now is the declining satisfaction treasurers have with their banking partners. Indeed, surveys on the topic suggest that satisfaction levels are at an all-time low.
When asked if J.P. Morgan is trying to address this slide through their recent activities, Beard answers: “It’s a really interesting point and I can understand where that dissatisfaction might come from. It might represent the fact that it’s still early when it comes to some of the changes in technology, business models and the transformation journey of some of the partners that they’re choosing. I would also say that it is a reflection on some of the traditional treasury technologies that we all use. How fast are they responding to some of those trends that I mentioned earlier?
“One of the reasons why we’re comfortable knowing that number is out there is that we think we can be a great partner by effectively coming up with a clear and practical roadmap detailing the way forward. Because, if you’re going to introduce let’s call it disruptive technology, that’s going to introduce something new into a treasury environment, it can’t just be a point solution that, for example, only addresses real time payments.
“What we’ve done is realise that by putting the customer at the centre of how we deliver our business, we have to think about that business end-to-end. It starts with the customer request, it might start with the invoicing process, it might then go to customer payment terms. All of those things that have traditionally been part of a supply chain have to be thought about when you’re thinking about using technology to evolve and lead the way forward.”
An early example of J.P. Morgan’s work in this space is its partnership with ERP and TMS systems, where a plugin for its cash and treasury modules have been created. The firm recently partnered with Kyriba to offer clients Real-Time Payments Integration through an API.
Disruptive treasury technology forces
So much of the talk around technology focuses on disruption, especially with the vast and growing array of fintechs looking to the treasury space. How does Beard see this playing out? How is J.P. Morgan working with fintechs?
“For us, it’s not about just having a hackathon and coming up with ideas, you need to think about it in the frame of customer-centric payments ecosystems. What is the driving force behind the work and responsibilities a corporate treasurer have? If you think about it in that holistic system, you come up with solutions that drive at the foundation of what treasures care about every day. So, we’ve taken a portfolio approach to our fintech partnerships. We look at our partnerships for the ability to complement and improve and innovate around the treasury ecosystem. That’s in addition to the 3,000 people we have working in treasury technology!”
Another key point that Beard makes is that J.P. Morgan is very much focused on solving the real problems treasurers have with their latest technology, rather than forcing a solution onto treasurers – a criticism often levelled at banks.
“This sums up how we think about innovation, because innovation really is creative problem solving. And the way to really innovate is to really design for the client, design for the customer and, importantly, to design for the ecosystem in which the customer has to live, not the ecosystem that banks have to live in.
“We can certainly talk about the suite of things we do. And they’re important. But what we really are challenging ourselves with is how we convert the delivery of new solutions in a way that says we can become the engine around what treasurers have to do every day, in order to make things better and better.”
Beard continues: “This is all the more important given the rise of millennials in the workforce. They expect things to be different and the lines between the consumer and corporate world are blurring. They expect to use the best technology at work. They challenge too. Why am I doing this? Why can’t I automate? Why can’t I do it? Why can’t I innovate? And, best of all, they’re using tools from other industries and sector to make that happen.
“In our wholesale payments business, we’re now in our third year of taking people out of our innovation labs and putting them in the business. We’re taking the UX designers and data scientists and putting them in the client environment, because success in the treasury technology space is about understanding how a user is going to use the technology. And the closer you can get that kind of expertise to the client and the business, the better.”
All about partnerships
As the discussion continues, Beard moves on to talk about effective partnership underpinning effective technology development and adoption. Innovation requires the ability to change and the flexibility to scale – only when that happens will the bar really be raised on corporate treasury technology.
“Partnerships are important,” she says, “and they have to take the form of industry partnerships and also partnerships across the whole ecosystem. Do this and you create a market for people to go and make change happen.”
Wrapping things up, how does Beard see the treasury technology landscape moving forward over the coming years?
“Some things are going to move faster and I think we’ll really see adoption of these technologies accelerate. As mentioned earlier, explosive connectivity is really going to make a bang. I actually think that API’s and faster payments and the use of API’s are going to proliferate. And I think that’s going to create unintended reactions on the part of treasury teams, who will need to be able to react and use the data well and make it valuable.
“At the same time, I think the sheer volume and level of data is going to require companies to rethink how they structure their day.”
Beard concludes: “The other trends to watch are going to be digitization and the digitization of everything. So you see the industry and you see a lot of companies really looking at user experience, empowering decision making, using technology, because it’s so fast and increasingly agile, to implement quickly. So people are more, I think, comfortable experimenting.
“If there’s one word that I’ve heard from clients in the last year, which we’ve become accustomed to hearing, it’s transformative. So many of our clients are very comfortable thinking about transformational ideas. And I think that alone will create momentum and make changes faster, and faster.”