Interest Rates, Investing, and Inflation - Predictions with Paul from Morgan Money

Joseph Drambarean (00:13):

Hey everyone. Welcome to Fintech Corner. My name is Joseph Drambarean and I’m the Chief Product Officer here at Trovata. And I’m joined by my co-host, Brett Turner, our Founder and CEO. And I’m really excited about today’s episode because we’re joined by a very special guest, Paul Przybylski, who’s a managing director of JP Morgan’s asset management liquidity business. But I think the reason why we’re excited to have Paul on is because he’s also the head of a product named Morgan Money. It’s an exciting new product that we’re actually very passionate about because we’re excited to be announcing a partnership with Morgan Money and a deeper integration. And so for those of us that don’t know anything about Morgan Money and kind of understanding a little bit more about it, I’d love to dig into that and understand a little bit more about how did Morgan Money get created, what is it and what is the backstory behind it? And Paul, thank you so much for joining us and giving us insight into all of that.

Running a JP Morgan Startup

Paul Przybylski (01:10):

Yeah, thanks, Joseph. Very nice introduction and congrats on getting my last name. That doesn’t happen often, but yeah, Morgan Money. So I think when I kind of go back to 2019, right, my boss, John Donahue and I were sitting in a room and we realized at that time how important technology was and how our clients traded using technology. So to give you a bit of a background in our industry, which is about four and a half trillion dollars in the US market, slightly over 40% of that number trades electronically. So it became pretty evident to us and at that time that we got to really step up our digital distribution game and we did the whole turnarounds with our seniors, ultimately went up to Jamie Diamond and presented our business case, which was essentially to launch an open architecture trading platform, which would be built ground up from zero, all internal proprietary technology.

And what we wanted to do was really go out to market and prove that a large bank like us could run a startup business within it. So that’s how Morgan Money essentially became the product now, which ultimately is a business within our asset management arm. Luckily, I was fortunate enough to have a very strong team with me. We built everything from the ground up and now we’re out there competing in the space with the rest of the industry. And I think that kind of what drew our attention to you, I think we had a lot of common vision. Our platforms I think are very much similar and cutting edge. So I think that’s the exciting part of connecting with all of you with and Brett.

Joseph Drambarean (02:57):

I think Brett knows very well there’s nothing I love more than a skunk works story. They’re my absolute favorite. So would it be fair to say that this is kind of like the JP Morgan’s SR 71 Blackbird story, if you will. It’s an amazing project.

Paul Przybylski (03:13):

Yeah, I think when we started we had no idea where it would go and what it would look like in the end. I would say you can only imagine how difficult it is in one of the most regulated companies in the world to launch a proprietary, trading client-facing application that’s not only for JP Morgan products, but also for non JP Morgan products across 86 countries where we are at right now. So it was pretty intense, but luckily we had the right plan, the right team, the right execution, and the right buy-in. So I think where we are today is also thanks to a lot of our hard work and dedication. I think we’re not only just a front-end technology for our clients trade, but also we scaled the platform to an area where we’re able to actually offer it as a software as a service for other intermediary banks, which is a very different unique piece of business. So I think when we see how we got here and where we are today, I think we are probably 60% maturity from a level where we want to go to and the next 40% is going to be even more exciting probably than the first 60. And partnering with Brett and his team has been one of the huge milestones I think in our journey.

Joseph Drambarean (04:30):

That’s amazing.

Brett Turner (04:31):

And I’ll just add a few things because Paul’s being modest too. I mean don’t, just to get some perspective of why we were so impressed, why I was so impressed too with the journey is it’s really rare. It’s rare to get first of all the kind of support. And I think hats off to you. I got to meet John Donahue and just seeing his passion for the project too, which I know was a big part of convincing him probably too, but also him being a part of that, but supporting you, Paul and I could just imagine the work that you guys had to do to team together and really ring-fence this within the largest bank in the world with all of the aspects of how hard it is to incubate and build a new innovative product. And again, no, no, I’m not saying any offense to that.

Trovata & Morgan Money Partner Up

Brett Turner (05:17):

JP Morgan is an investor. We work closely with them, like a lot of banks, and we love our banking partners and we’ve been pioneering APIs with them on the transaction banking side, but I just know how hard it is to really drive innovation or for them to drive innovation. That’s why we’re doing it with them. But it was sort of this cool, refreshing moment when we first met you guys and just that you guys had done it. You guys had actually done the unthinkable building something new, something modern, a lot of legacy tools out there. We looked at them because we were looking at partnering on who we could partner with too, on the side. And just seeing what had been built and seeing what you guys did and the fortitude to make that happen in a fairly short period of time. I can only imagine how hard that was and how you had to contend with a lot of aspects to get through that journey. But I mean now that you’ve done it and now that you kind of keep proving your way through that, and now that we’re getting a chance to work together and seem a really kind of two best in class solutions, it just feels like the sky’s the limit.

Paul Przybylski (06:22):

Oh, definitely. I would tell you from experience, the first year was very tough. So that was November ’19 and then COVID hit, so that was even tougher. So when all teams got decentralized, we managed to pull that through. And when you kind of look at Morgan Money now, it’s a independent, almost a company within a company in a way that way it’s structured. So we have a marketing team, we have a tech team, we have a client service team, we have a sales team. So it’s a very much a business wrapped within a business and working with and actually working with Trovata. I mean, it also kind of keeps us on those toes to be nimble so we don’t fall into that bigger banking mindset as we continue to push forward.

Joseph Drambarean (07:03):

I think the thing that I’ve loved just getting to know you guys and getting to know you Paul, is how much you care about the experience. And that’s something that’s just so core to everything that we do at Trovata. So being able to work together on something and just seeing that we both care a ton about the end client experience and how they get value out of both of our products. That’s been one of the things

Paul Przybylski (07:43):

It’s heavy, it’s table heavy. It probably at the time when it was launched it was great, but 10 years down the road, it’s no longer what it’s supposed to do. And that’s the piece that, experience for me needs to be continuously enhanced, especially when you kind of think about how our demographics of our investors is changing over time. If you think about today, data investment demographic is around that 40, 50 age ones coming up are 20s and 30s where their experience is going to be even more revolutionary to where we live today. So far more enhancements in how the structure of experience works far more efficient and most definitely it needs to be sitting on the mobile platform. That is where it needs to all get to. So just by the force of our investors, we have to continue to innovate.

Joseph Drambarean (08:40):

It’s amazing and I think that you can see it just in how breakthrough the product is. As Brett said, it’s best in class by far.

Paul Przybylski (08:53):

Oh, you guys are making me blush.

Brett Turner (08:53):

People are using Robinhood and Reddit, so the shift has to start coming. You’re being too nice too, Paul, when you say what else is out there, it probably was nice 10 years ago, I would just say, well, maybe you mean 30 years ago.

Paul Przybylski (09:10):

[inaudible 00:09:08] You got to stay humble, man. That’s how I live my life.

Brett Turner (09:14): 

For sure, for sure.

Is AI a Good Investor? 

Joseph Drambarean (09:16):

I’m just going to kick this off today with one of the openers that we’ve been doing over the last few weeks has been focusing on really what does AI mean long term for the topic that we generally discussed, Fintech, cash management, investment, et cetera. Well, yesterday there was a news story that kind of introduced the fact that the API that ChatGPT has been using over the last few weeks and months has gotten a big evolution of just to a new major version 3.5. And so what I thought was, Paul since we have you here, I’m just going to throw you right into the sharks and we’ll see what we get in terms of an answer. But what I’m curious is how do we feel about the possibility of AI playing a role in the environment that we’re in right now?

Right? Because interest rates are at an all-time high. If you are on the corporate kind of cash management side, obviously if you’re on the consumer side, this isn’t good. If you’re trying to buy a house, this is like, oh, maybe this isn’t the best year to be buying a house. But if you’re on the flip side, this is an amazing time. So how do you guys feel about all of the folks that have been jumping into ChatGPT and typing in, Hey, I have $10 million of excess cash, what should I do with it?

Paul Przybylski (10:40):

I think it’s a bit more complicated what to do with that 10 million bucks once you type it into the chat. But listen, I think if you think about the big picture on AI, it definitely attracts a lot of money and it attracts a lot of computer scientists and it does have a lot of usages. But you got to also got to think about it’s pretty new. And if you think about the innovations over the last two years, we had the metaverse, we had hydrogen, we had buy now pay later, fintechs, we had crypto. And for the most part, those things have not necessarily materialized to the hype they had. So I think with ChatGPT, and I was reading an article a little bit earlier about it has a reported IQ of 147, which is like a 99.9 percentile, but it’s still got to get a little bit better and routinely does make mistakes or what they call effectively hallucinations, where sometimes it doesn’t understand what year it is incorrectly states Croatia left the EU… So there’s still a little bit of work to do before we can use ChatGPT in the investment universe to your example type in I have $10 million, what do I do with it? That’s kind of my initial thoughts as you throw me into it.

Joseph Drambarean (11:56):

Yeah.

Brett Turner (11:57):

I was going to say, I think Paul’s got the conspiracy theory is Morgan Money is like there’s a line of code that’s being inserted somewhere along the line. So the answer is going to be, oh yeah, just go to the Morgan Money team.

Paul Przybylski (12:10):

Yeah, I mean Morgan money is run by ChatGPT. Just kidding.

Joseph Drambarean (12:16):

That is so true Paul. It’s funny that you mentioned that IQ thing. It’s something that, especially from an investment perspective, we’ve seen this too, just talking to clients getting deeper into this topic as more and more people are asking about solutions and what to do because everybody’s reading the same headlines at this point. And maybe you could have been a more conservative operator prior to the rate environment, but now it’s almost like you really have no excuse that you have to do something. And I think as all of the flooding of the market has taken place in terms of products, in terms of technology solutions like ChatGPT or analytics solutions, it’s really interesting to see how they all come together and create this kind of almost synergistic moment of what is the right way to approach the mindset, if you will, of maximizing excess capital?

Interest Rates, Going Up or Down?

And I guess maybe that’s the setup and the segue and sorry for throwing you in there right with the sharks. I was just curious to get your take. But yeah, so thankful that you joined us on the podcast today because I know that your insight in this space is better than I think anyone. And I’d love to hear more of your thoughts on what you guys have been seeing just generally and the topic of the rate environment and how folks on your client’s side but also just generally have been navigating this topic. And I know we’ll get into more detail, but high level, what has been your reaction just kind of seeing the opportunity?

Paul Przybylski (13:48):

Yeah, I think if you look at the products that we look after from a fiduciary lens is that money market funds have been providing the highest yield in the last 15 years and they offer liquidity, stability and stability of principle. But you’d be surprised how many investors haven’t necessarily revised their cash management approaches yet. I think there is, since the Fed begin hiking rates at basically a rate that has been at historic speed and velocity, it definitely lifted up the money market fund yield substantially. Think about it now you’re essentially getting 4.5 to 4.75% on the money market fund product. I mean think that is significantly higher than you have seen right in a number of years. So our clients and investors are now starting to really rethink their liquidity management strategy as cash is an asset class that’s essentially in play.

If you think about year to date, S&P return is just under 3% so far, granted the fact we’re in March, but if you think about cash is out yielding that, by roughly one and a half percent. So I mean it doesn’t mean that’s how it’s going to go all year, but it kind of gives you a lot of perspective that clients are able to earn a meaningful spread on money market funds and that actually shows by the surge of inflows into the space. So in the US market kind of give you ground you some numbers. In the US market, the money market fund industry is about $4.5 trillion. Pre-COVID, that number was about a trillion less. So you can see how much money has moved into this space and a sizable percentage of that is traded electronically via platforms like Morgan Money or via different other platforms.

Tech in the Investment World

So money moves at a very fast speeds in this business since these products are managed to a very high standard. And although there’s differentiation between providers, clients do have options and ability to shift around very quickly. And that comes to the testament of what technology does. I know we joked around starting with ChatGPT, but tech in the investment universe in the world of managing money is very much a alive and well. We use a lot of proprietary technology to size portfolios, rebalance portfolios, which historically was done by individual portfolio managers and spreadsheets. Where now it’s basically push of a button type of an approach that allows you to use the time for thought process and portfolio positioning versus doing the manual work of manually sourcing the data out of Bloomberg and then effectively reallocating. So we kind of joked around it, but not necessarily full-fledged ChatGPT, but there’s definitely elements of technology being utilized across the investment spectrum.

Joseph Drambarean (16:48):

Well Brett, that actually makes me think of how do you see the role of technology in all of this? Because you’ve been an operator at this point for a really long time in a CFO role, now as a CEO, and liquidity and maximizing that liquidity, you saw every generation of that, right? Human capital being applied to it, just a bunch of folks going through reporting, providing you insight. And that might not be happening at the pace that we would need, given kind of what Paul is talking about here. If you have an opportunity to take advantage of a rate hike and that’s like maybe measured in a window of a week or two weeks or three weeks, whatever it might be, the old processes aren’t really going to get you there. So what kind of technology do you need to have in place to even react to these types of opportunities?

Brett Turner (17:41):

And this is kind of a follow on question for Paul and because you look at this is exactly why we’re partnering, right? Because technology, like we talked about ChatGPT, but just in general, there’s just a lot of also low hanging fruit with just basics, just basic automation or things that we take advantage of in other sectors. And the cloud is driven all the innovations, but yet are just finding its way into finance 10 years later or driving this, it seems obvious to us, but a lot of customers are just don’t have a lot of that good nice flow through with all their workflows and it’s really clunky and they’re having to depend on too many different things. But yeah, I think the reason why we’re partnering is to really accelerate that drives some automation, make that easier to do and excited.

Take Advantage Now of High Yield

It’s about our technology’s kind of meshing together really well from that standpoint. But it also, when you think of those numbers, Paul it and what I’m hearing a little bit too, it seems like it actually should be more than that. I mean if you look at the last decade, it’s almost been almost a, it’s lulled the finance treasury folks to sleep a little bit because there hasn’t really been much of a yield opportunity. And then in the last year plus all it’s just completely taken off and now the boards are hammering CFOs and treasurers and just, if you’re not stewarding that cash into some yield opportunities, then you’re going to have to answer some harder questions. Why not? There’s a problem there, you’re not doing your job. And even when you look at the last with yield having been there for the last year plus, it still seems like there’s a lot of companies that are really slow or reticent to even move into basic vehicles like money markets.

But I know there was some things like back in 2008 when there was some liquidity concerns and even in terms of money markets, but that’s all cleared up. These are all readily available. It just seems like the take rate should be more, how much is that a technology? How much maybe is just the kind of hesitation or reticence of investing in some of these other vehicles? And then third, maybe some of it’s maybe just shaking off some of the rust, like you got to do your job of investing when they haven’t had to do that before.

Paul Przybylski (20:00):

Yeah, I mean I think, you know, mentioned 2000, 2008, which is for myself being in this business for 20 years is like PTSD in a way. So that event was primarily credit driven, so that was more of a credit exposure perspective and certain investments shouldn’t have been in the portfolios, but they were, and unfortunately it led to pretty bad outcomes. But you look at now where we are, these products, money market fund products are the most highly regulated securities in the world effectively, right? There’s a significant amount of regulatory scrutiny. These products are very much in a preservation of capital first. Effectively yield is a secondary aspect, but in the rates environment that we’re at in the government money market fund triple A rated, you’re essentially betting on the default that the US defaults, which if that happens, there’s obviously very different circumstances would be happening in the world.

And technology does play a role. I mean, I think if you are a corporate treasurer and you’re coming to start your day having up a cup of coffee, you fire up Morgan Money and you look at where your money’s sitting and where your yields are at, you can very easily rebalance your portfolio in a handful of minutes and then walk away. So I mean that’s the partnership with you, Brad, is that we want to bring that execution of efficiency because I’m not naive, I know treasurers have far more other things to do more value at a task. And the whole idea is to give them that flexibility essentially with the tech and keep in mind that when rates rates where they are today, we do expect from, if you think about what the market is saying, we do expect another 25 raise in March and in May and there’s a 50% shot of it happening and in June, but the leg, once the rates stabilized, it’s also very important for treasurers to also not miss the second leg, which is a race when they start coming down and if they are sitting in deposit products, those deposit products were reset much faster almost instantly overnight.

Whereas the money market fund will actually insulate them a little bit longer because it takes a longer in terms of the duration sitting in the portfolio that the portfolio manager can actually actively manage, which means they’ll get a better return. So I think we were kind of alluding to is that right now corporate treasurers and CFOs get the taste of net interest income on cash that sits idle and I think that’s great and now there’s going to be a level of expectation to maintain that on a P&L. And one way is just make sure that you have the right investment policies so you don’t miss that leg down.

Joseph Drambarean (22:40):

Be careful what you wish for the board is saying, hey, maximize it and then you do. And then it’s like, oh, well is this going to maintain over the next few quarters? And the answer is, well, we’ll see what the market does. 

Beginner Corporate Investing Advice

I think that that’s a great point, Paul, at the end of the day, I think one of the things we’ve also heard from our customers is where do we even get started? Because this is, when you think about this type of policy, it tends to be one that is reserved for more sophisticated treasury operations. If you are sitting in a business that may be sitting on excess cash and that might be a significant reserve. And you did that in the past because you were going through COVID for example, and it was part of the policy coming from the border or from the business itself of having maximized liquidity in the event of some shortfall or in the event of some change or headwind economically. Well, the tables have turned right and things have started to stabilize on that front in terms of COVID, but now we’re sitting in a different situation from a market perspective, how do you advise or give advice to first timers? How do you even approach this topic? Is it a balance of technology and getting the right advice? How do you even navigate that?

Paul Przybylski (23:58):

Yeah, it’s definitely a mix. I mean, I think when I talk to clients about the investment policy or even broaching that topic, I think to your point, depending on where they are in the cycle of their maturity is they’re going to have two different answers. I have seen investment policies which are very detailed and I have seen investment policies which say purchase deposits. So I think if you’re starting out just new, I think a lot of, we can provide definitely a lot of guidance and help with that. But I think you should also start slow and understand what are your financial goals as a firm and understand what investments need to be married to that understand your cash flow. I think understanding your cash flow is hugely important in structuring your investment policy. And also at the same time, you have to remember what that cash is used for.

So if you think about bucketing your cash into operating, which is basically your payroll, then you get into more strategic and reserve buckets. Your policy needs to account for those differences in products, but at the same time, you need to balance the risk versus the reward specifically when it comes to cash. And I think primarily corporate treasurers by definition are more risk averse individuals. So you’re not going to see a lot of emerging markets policy statements for cash reserves out there, but you will see government funds, treasury funds, credit funds out there in that spectrum. So I think it just, we definitely on our public, even on our inside papers of basic blocks, how to build an IPS statement, but I guess it starts with the person doing it, understanding what are their actual needs of the firm and at what stage of maturity they are to really write a meaningful starting point. And I can tell you that over time, as that company grows, that investment policy is going to change because they will grow with appetite and that will require revisions to that statement.

Brett Turner (26:02):

I think one, because I didn’t really answer your previous question though too, Joseph, but this kind of hit squarely on it though, because at the end of the day, this is Trovata. Trovata’s the on-ramp, right? If you think of a lot of, and why we’re excited to working with the Morgan money team is because they’re making it easier. The tool makes it easier for larger corporates and treasury teams where there is some expertise, but then if you look at, you know, keep going down market and then it just becomes harder and harder because there’s less expertise, there’s less volume of funds, there’s not good tools aside from Excel of helping you with forecasting or understanding where some of those demarcs are, where the liquidity lines are of your operating cash flow, what’s excess. And if you don’t have good tools to do that, then you’re having to hedge and then you’re putting so many layers of hedging on then there’s not much there excess to be able to do, there’s not the volumes that are interesting to be able to then worth it to move those. Is it a big enough chunk of money to move and then get yield on that amount?

So at the end of the day, so what’s so beautiful about this is with how technology can play such a crucial role is because if you can do that easily, if you can get that intelligence easy enough through that process and that’s what Trovata does, then it really, you’re really democratizing something that’s really hard to do that now is right, especially in these times you got to do it. It’s so ripe, it’s like ripe fruit on the tree, you got to go pick that fruit. And so just making that accessible and not only speeding that up and making it easier and better for larger companies, but with all the front loaded intelligence to be able to do that even better and faster. But then also making it available all the way down companies that are, whether it’s small enterprise or mid-market, and even down below that, if you can create some of these easy buttons or this easy on-ramp, so they’re thinking if they can think a little bit more from a business side, they know their business, they can think real easily without having to have all of that expertise in-house or even having to build these partnerships necessarily that might help them weight in or manage that because those can be expensive if you don’t have a lot of high volume dollars to do it.

These are the things we’re crossing the barriers. So democratizing all of this, working with Morgan Money, having all that intelligence, it just blows the doors open in terms of that market accessibility customers that actually can participate and do this without a massive heavyweight or anchor preventing them from doing it.

Joseph Drambarean (28:37):

Yeah, I guess Paul, we’re pretty passionate about this. You’ve probably heard us in meetings kind of going on and on about how we think we’re transforming things and it’s because we have this thought that it should not be a complicated issue to figure out how much cash you’re sitting on and then the bucketing that you are talking about, having clear visibility into, hey, look, from an OpEx perspective, from a payroll perspective, from your cap, all of the different categories that run our business. You should have a clear line of sight of where that money has gone and where it will likely go, just given best practices. And so whenever you get kind of Brett especially, and then myself riled up on this topic, it’s because we feel so strongly that that should not be a barrier to entry to making strategic and insightful decisions once you know, “Hey, look, we’re sitting on excess, or we might have a shortfall two months from now because of some strategic thing that we’re going to do.”

And imagine if that was not a blocker and you had that kind of visibility immediately. It’s not a matter of, hey, my task force of folks in accounting or in FPNA go do this research for me so that I can make a decision at the end of the week. And then you miss out on any possibilities that might be playing out in front of you. And I know that we’re not talking about short term investment windows, we’re talking about more strategic, but at the end of the day, it all kind of rests on the same principles. You need to be nimble with regards to this visibility. And I’m curious, hearing us talk about all of this, what are your thoughts in terms of how a platform like Trovata would help kind of inform the behaviors of how you might think about opportunities with a product like Morgan Money? Because I know that we’re working together for a reason and we’re really excited about that, but how do you guys see the angle and what it can mean for customers?

Turning Insight into Action 

Paul Przybylski (30:29):

Yeah, I mean I think the way I think about as we’ve been working together for probably almost like a year and a half now, I mean, it’s been a while. I mean I think if I had to summarize in a sentence, what we’re trying to do is we’re really taking insights and turning them into action. I mean, if a client is sitting on Trovata, right, and they’re working towards understanding where cash flows are, they see and they feel it, now they’re ready to make that insight and turn it into action. And this is where Morgan Money piece comes in, is that we give them that flexibility and that tool to give A, they know where everything is coming from, they’ve done the work that usually took probably far longer, far more efficiently, I would say definitely a lot more accurately because in one of my old seats here, I was a CFO of Fixed Income and Liquidity. So I can appreciate Brett’s past history of how painful it is to centralize and actually make a decision at that point.

But then when you’re ready to make that decision, then the execution needs to be just as seamless as everything else because that’s where it matters. Ultimately, you’re going to have the great insight, but if your execution is poor, then your outcome is going to be just as good as your execution is. So I think our really value add ultimately is we allow through this connectivity, insight into action is effectively painless, seamless, super easy to do, and everything is then connected on the way back just because then you execute through the trades, whichever ones you want it to execute, information flows instantly back into Trovata and you’re moving on to the next steps. And you’re living in that cycle that is very much automated in a way that allows you to not necessarily overly complicate your day, but at the same time maximize your value and benefit. Because even though traditionally speaking you that analysis could have taken you a handful of weeks or a month, et cetera, then you took you another handful of weeks or months to execute. But think about it, that’s two months out of 12 when you could have been earning four and a half percent,

Joseph Drambarean (32:38):

Right.

Paul Przybylski (32:38):

That’s real money at the end of the day to any corporate realistically speaking.

Joseph Drambarean (32:43):

And that’s not counting the staff overhead, that’s not counting kind of all of the thought capital that goes into it, the lobbying that you have to do. I mean, there’s so much that goes into that whole process and then it doesn’t end at just two months. You have to keep iterating on it and reporting on it and providing that continued value, as Brett said, can’t just do it once, set it and forget it, and then that’s it, we’re done. I think that the whole point is that you have to almost transition to this mindset of its evergreen. You never stop. Once you go into this mode, you won’t stop because there’s opportunity. And so how can you give yourself leverage in that scenario? And the only way to do it is to have the right tools, is to have the right opportunities be presented to you so that you can make the right decisions. And I feel like that’s the synergy here. That’s why we’re so excited. And I’ve been doing this over the last few podcasts using this as a social platform because I’ve been noticing I can get Brett to turn it on when it comes to value for customers in this platform. So I’m curious-

Brett Turner (33:47):

Might have a giveaway now, Joseph. No.

Joseph Drambarean (33:50):

I’m curious. Brett, you know, did this with payments in the last podcast and that was fun. What about this side of the house, because you said democratization of this kind of tooling is important to us and it’s important to you in your personal journey in everything that has gone into Trovata, are you prepared to make any offers to our audience about how they could take advantage of this kind of experience that is kind of end-to-end in vision between Trovata and between Morgan Money?

Brett Turner (34:21):

Absolutely.

No. I mean, yeah, there’s so much at the heart of really what goes into Trovata starting the company and just again, it’s a little bit like we’ve all played as a kid, like the pin the tail on the donkey, you know, got the blindfold on and yeah, you’re usually getting something on the board, you’re getting something close. Of course it’s fun, but it’s like, it’s a little bit like forecasting and there’s just not good tools to give you that intelligence. Paul says the insights. And so if you lack the insights, you’re not necessarily running things blind, but it’s more opaque and you’re just, you get close, you’re always kind of skirting around the bullseye. You don’t really know where maybe the edges of risk quite are, so you just buffer and I think at the end of the day, if you can get precision, then you should be getting the bullseye every time, not once in a while, every time, and do it right away. Because if you’re waiting and all this planning and conservative to get there, then you’re leaving all this money on the table.

So yeah, we want to do something special and continue to… A little bit of our approach. I don’t know, maybe being at Amazon once upon a time is a little ingrained in me, but I love the Amazon model where especially back in the day, they’re doing things to get leverage and they’re passing on that savings to their customers and they’re doing that. They’re thinking, okay, is that, that’s altruistic. You’re making it more accessible. But obviously it’s helping Amazon too because it’s helping them grow and get more volume. So it’s just as a win-win that whole virtual cycle. So I think for us, and we look at things like some of the investment partnerships and the integration like we’re doing is more Morgan Money, the things we’re doing with, with ERP integrations or even with bank integrations, there’s some of these things we just fundamentally want to bring those barriers down because those are the ways to kind of get in because it’s all kind of data driven.

Trovata w/Morgan Money Access – Free 

And so yeah, long setup to say we want to make the integration and the experience that we’re now doing with Morgan Money, we want to make that free to all customers. So it kind of starts with a few things. One, Trovata is now free to start up. You can sign up off our website, this is unheard of in the enterprise space. You can literally click get started, go through that process, we’ll connect your first bank for free, not your first bank account, your first bank, and now we’re going to include Morgan Money access in there as well. You can actually get free access and the free connection that we’ve done, the integration of data flowing in as well as the experience accessible to be able to get access to it from within Trovata. So those synergies are really high from just a workflow standpoint like Paul described. So we’re making that free, we’re super excited about it. We keep gaining momentum to add these pieces into this experience. This is a really key one, one that, yeah, we’re super passionate about. I’m super passionate. I know Paul is as well as where this is going to go and it’s going to be a game changer. So we want everybody to experience it.

Joseph Drambarean (37:25):

Oh man, this is amazing. I’m so excited to hear you say that because I really think that it puts all of our money where our mouth is, if you will. We believe that this will be meaningful for our customers and we want to get them in there because the only way to get to the point of making these types of decisions is to have visibility. And Paul, I think at the end of the day, you and your team, you’re set up beautifully to drive value for customers that get to that point. And so this is why I’m excited. I’m excited that Brett is willing to do this in a public way. I don’t know if you’re be willing to give your take on this announcement, but we’re excited to be all in on this opportunity for our joint customers.

Paul Przybylski (38:06):

Yeah, definitely. I mean, I have seen been here long enough to understand what was out there in the market, and truly I think what we have here is just, it’s very, very amazing. I think at the end of the day, what we bring to the table, fully open architecture platform for trade, anybody that, any provider that client wants and what ultimately the whole stitching to Trovata the connectivity. And I think we have other things up our sleeves that we’re working on together. Maybe we’ll save it for another podcast, but this is, I think a very strong beginning to a very good journey ahead of us.

Joseph Drambarean (38:42):

Absolutely. And I think that the other exciting piece to anyone that’s listening and for the internet at a wider audience is we truly want this to be an experience that is open for everyone. So feel free to explore, sign up and get in touch because the offer is true. Connect your first bank, get access to the Trovata platform, and then get access to the Morgan Money experience. And that end-to-end experience is one that you will not get on any other platform. And we feel very confident about that. So this is an exciting moment, an exciting day. And I wonder, Paul, just kind of having rolled around in this topic now for 30 minutes and thinking about the opportunity, do you have any closing thoughts given the opportunity that we’re presenting with this offer with just the general market conditions and how long it may last? You know, mentioned that there are still other kind of important milestone moments that are ahead of us that may impact and create more volatility to the situation. What are your thoughts entering into the back half of the year, if you will? We were done with the first quarter, we’ve got the summer quarters coming up. What do you see as the opportunities going forward?

Where is the Market Going? 

Paul Przybylski (39:56):

Yeah, I mean, I think right now, what we’re seeing on a year to day basis, money is definitely moving into money funds. I think clients are seeing the spread. And if it depends on what kind of investor you are, if you do invest into credit funds, there’s generally an out performance over government by additional 20 to 30 basis points. So think about it, you’re nearing 5% on that investment. So as rates will most likely for what is kind of baked in from a probability perspective, should increase by another 25 bibs in March and may. So potentially 50% in June, and then they should level off. So think of terminal rates around 5 to 5.25%. Our expectation is, from what I see in the market is that that will remain static at that level for rest of the year. And depending how the Fed carries and threads the needle on inflation, we’ll see what happens in 2024 where there are some potential shifts down in rates.

But think about it this way, even if you have two rate cycles of rates coming down from 5 to 5.25 terminal, you’re still sitting in a 4.5% type of an environment. Money market funds are definitely a favorable investment. Obviously we don’t want to go back to where we were near 0 rates. So what we were approximately three years ago, that was a very challenging rate environment, but I don’t think we’re going to see that anytime soon, I think. And elements of the inflation we’re seeing are effectively becoming baked in to our environments collectively and our economies. So I think rates will definitely be perhaps not as high as they might be by coming at the end of the year, but at the same time, they will not be drastically lower where they were 3, 4 years ago.

Joseph Drambarean (41:42):

And I think that the other story to tell here is that regardless of what happens on that front, this is just generally best practice. Getting into a motion of having a strategy with regards to maximizing excess capital and doing something about it and having a platform that can support you in that regard, I think is also the story we’re trying to tell here, that it’s not just a moment in the market right now where it’s like, let’s get in while we still can. This is not a, GameStop moment.

Paul Przybylski (42:11):

Yeah, it’s not a, it’s not a yellow moment or a FOMO moment for sure. But I think you just got to, you also don’t want to be in a position of completely scrambling, right? I mean, if you want to want, to your point Joseph, you want to have a game plan ready, plan of attack and the insight to be ready to execute. So even if you’re not interested or thinking about these kind of products now, that doesn’t mean you shouldn’t be ready to go when the opportunity time arises because it does take time to go through probably internal approvals on each of the firm side. So I think it’s prudent to be ready to go and ready to pull the trigger when the decision comes. Certainly. And this technology, this partnership with Trovata, I think gives you exactly that. It gives you the best of both worlds. It gives you access to the insight and it gives you the access to the action, right?

Joseph Drambarean (43:08):

Absolutely.

Brett Turner (43:09):

It gives you that future proofing of what you can do as things change, right?

Paul Przybylski (43:14):

Yeah. You just got to be ready to embrace a bit of technology. I think that’s really what I see probably as a stumbling block for some treasurers perhaps, is that they kind of getting into that tech space and I think once they’re there, I’m very confident they won’t leave.

Embracing ChatGPT

Joseph Drambarean (43:33):

Well, we’re getting ready to embrace the possibility of a future of humanoid robots and ChatGPT running everything. So I think embracing a little bit of technology is not a tall order, at least, I hope.

Paul Przybylski (43:46):

Yes, exactly. Well, we’ll see what the future podcast look like, Joseph.

Joseph Drambarean (43:50):

I won’t be here. It’s just going to be a humanoid version of me. It’s all going to be auto-generated. by the way, just on a comical note, we decided to run a script of what a podcast might look like through ChatGPT. Very scary. I don’t want to read it. It is humorously and dangerously close to the types of topics that we would want to talk about. So who knows, maybe I will be replaced as a host. You never know.

Brett Turner (44:18):

Yeah, we are trying to save a little money.

Joseph Drambarean (44:20):

There it is.

Paul Przybylski (44:23):

Well the topics are only as good as the entire understanding and knowledge of what sits in the sphere of the internet, so that’s how the chatbots get smart. So maybe we just got to tighten that up a little bit. Then it’ll be fine.

Joseph Drambarean (44:37):

Well, Paul, thank you so much for joining us on Fintech Corner today. This was an awesome discussion and I really appreciate your time and we’re so excited about the partnership and what’s coming ahead. So thank you. Thank you so much, and hope you have an awesome rest of your day and weekend.

Paul Przybylski (44:52):

Thanks guys, appreciate both of you.