Decoding Uncertainty: How Morgan Money Helps Clients Fuel Growth Despite Volatility

Brett Turner:

Here we are at AFP. Thank you guys for carving out time to be on FinTech Corner. We’ve gone live here at AFP. Lots of action happening. It seems like this conference is busier than the last couple. Maybe it’s because it’s in San Diego and San Diego’s cool, but you guys are from New York, a little bit of a travel you got in here. Thanks for carving out time to be with us. I am Brett Turner Founder and CEO of Trovata. I’m sitting in for the podcast master Joseph and you guys are

Joe Vittoria:

So I’m Joe Vittoria. I’m an Investment Platform Specialist with Morgan Money. I’ve been on the team since we started the business and I worked for Paul covering basically anything and everything. Morgan Money,

Paul Przybylski:

Paul Przybylski, Head of Product for Global Liquidity as well as Head of Morgan Money. Good to see you, Brad. Yes, it’s been a minute.

Brett Turner:

Yeah, it has been.

Paul Przybylski:

Yeah.

Brett Turner:

Well, so here’s one thing too that the world has changed so much. I mean it feels like it’s now changing every, there’s something big happening, but aside

Paul Przybylski:

From 10 to 5% today.

Brett Turner:

I know I saw that this morning and that’s a topic for today, right? Think of it where we’ve come out of this period of 10 years of just complete famine and then the last few years the rate environment massively different. It’s got to be fun. This has got to be, what’s it like right now versus where you’ve been?

Paul Przybylski:

Yeah, I mean listen, it’s obviously fun when the rates are above zero. So for our clients, the yield, the attractiveness of the product of a money market fund, which are close to 6 trillion in the US market, it’s fun. I think at the same time you got to watch what the next 12 to 16 months will show us in terms of where we’re heading in the economical direction. I think there’s going to be some stress at some point down the road with that, but for now I think clients are definitely enjoying that. The yields that the funds are generating. Generally you see CEOs above 5% on the government Money Market fund, which is a great investment product relative to deposits. But I think as you see Feds take actions. There’s a November meeting coming up in the next week and then potentially rate cuts in the future. So we’ll see where this all heads, but for now it’s a lot of fun as you are kind of categorizing it, but at the same time it’s a lot of stress in the market and anxiety as well that the investors need to be aware of.

Joe Vittoria:

Yeah, I totally agree with you and honestly, to add to that, just generally speaking, Money Market funds have not been relevant or money product has not been relevant for treasurers or treasury teams In 15 years. We went through eight or nine years of zero rates. So to your point, this is the first time we’re really seeing treasury teams, cash management teams, and honestly CFOs asking about what can I do with my cash? Can money market funds be viable? It’s become a much more, let’s say, hot button topic than it has been for a long, long time.

Brett Turner:

So if you even just think in pragmatic terms of traffic at the booth this year, maybe the last couple of years, but versus go back a few years, it’s got to be a lot more for the traffic.

Paul Przybylski:

Listen, it’s tough to sell a product that returns one to three basis points. It’s easier to position a product that has very attractive returns. So I think there’s a lot of general excitement in this space and obviously the role of treasury has changed over time where the department is looked at as a value add proposition now where they’re looked to as just not necessarily in their reporting element, but more in a strategic driver direction where revenue is a factor. Net interest income is a factor. So for them they need to effectively continue producing because once the firm, for example, gets used to a return that is favorable, that expectation from the CFO is going to continue throughout this course now going forward. So that role of treasurer is dynamically changing to account for how markets are behaving.

Brett Turner:

I was going to say, is that also in some ways, are treasuries even used to that? Are they having to kind of dust off the rust a little bit and how to manage?

Joe Vittoria:

Many moons ago when I worked in treasury, all we were really focused on was keeping the lights on, paid the bills, you set up the invoices, you sort of coordinate suppliers and then you do integrate systems, et cetera. But it was mainly, okay, you’re a cost center. You guys are costing me $300,000, $500,000 a year to run your systems. You’re earning nothing on money. Let’s see if we have excess cash. This is now the tables are completely turned for the first time in. I can’t even remember when rates are covering technology costs for the most part. And you’re definitely earning enough on even marginal amounts of cash to then to Paul’s point, be of value, add to the business and be strategic about what you can do.

Paul Przybylski:

Yeah, I mean I think just adding onto that, I mean you asked the question already already. The question is some are and some aren’t. I think the ones that are adopting technology are going to be in a far better positional place. Even looking around this conference as you said, I mean there’s a lot of booths here, but I see a lot of new names from a FinTech space. We’re kind of getting into the value chain of the treasurer’s office, which it’s all about helping them to be positioned better to take advantage of the market.

Brett Turner:

And so if you think of now treasures doing more things, they’re kind of getting back to a little more of the broader toolkit that they’ve had. They just haven’t maybe exercised some of those muscles. I mean, do you think even the treasury profession and then tech changing so much, all these things, do you think they’re kind of positioned to do that? Do they still need to evolve a little bit? They’re having to be a little more strategic.

Joe Vittoria:

I think the conversation has changed in the past four years. I think that the technology’s advanced, technology’s become a much bigger part of that because it’s always the conversation about doing more with less. I mean, even though rates are up, and to Paul’s point earlier, there’s still a level of risk and uncertainty and what’s coming. So you don’t want to overhire in these treasury teams. You see a lot of very lean teams trying to do a ton with the same amount of people. Now they’re implementing more systems. They need to sort of have expertise on the ground and that’s where a company like Trovata or a group like Morgan Money come in to then continue to make it, let’s say further leverage existing resources to add value.

Paul Przybylski:

Yeah, I mean I think if you look at what is out there today, right? I mean you saw the development of APIs in the last two to three years, which wasn’t around as a concept before you had to deal primarily with Fighter Swift or SFTP based. That’s great. Concept of ChatGPT or chat AI or AI or machine learning. Those are new ideas that are still starting to find the foothold in how to make the efficiency and the technology play at the treasurer office to help compensate some of the resource constraints. But I think some are definitely better than others. It depends on how big the company is, how much resources are being dedicated to tech. Generally speaking, a treasury department is broadly tech underfunded versus tech overfunded large scale products like TMSs and integrations of those take time and resources for them to budget for. So I think it’s getting there, but at the same time, I don’t think we have really reached the pinnacle of that.

Brett Turner:

Do we think the days of the almost just free money that decade, do you think that’s well behind us or do you think we start to kind come back down over the next? That

Joe Vittoria:

No one’s got a crystal ball. Brett, what are you asking?

Brett Turner:

Of course, that’s the crystal ball question you guys got to answer. I’m trying to corner you for that.

Paul Przybylski:

Yeah, the crystal ball question is that if you listen to the Federal Reserve Chairman Powell, he’ll say rates are here to stay longer and higher. Inflation is still not where the Fed would like it to have it. So I think there’s, for the next, I would say, reading what the future of market is pointing to next 12 to 16 months, you expect rates to remain relatively at the current level, perhaps slightly declining over the course, but the crystal ball answers and the data that comes in that gets fed into the Chairman Powell’s effectively desk. So it’s hard

Brett Turner:

To, I ask a power question.

Joe Vittoria:

It was a matic answer too that was well placed. That was good.

Paul Przybylski:

That’s why that’s here, Joe, to have an diplomatic answer to Brett’s curve ball. There is no right or wrong, but I think if you think about the investment universe of a treasurer, even if rates do take down a hundred basis points in the next 12 months, you’re still talking 4% returns relative to a deposit or an alternative vehicle that isn’t going to have enough of a spread differential. And then just remember as rates go up, the deposits lag the effect of that. However, when rates come down, there’s an immediate effect of that. So money market funds and short-term investments will be seen more favorable in the second leg of this interest rate hike.

Brett Turner:

Got it. Okay. So Joe, what’s the non diplomatic answer?

Joe Vittoria:

I’m not going to give you a non diplomatic answer, but to answer.

Paul Przybylski:

You got to keep this in the rails.

Joe Vittoria:

Right? No one’s going to give you a two to 3% target forever, but I will say,

Brett Turner:

Okay, Joe says target

Joe Vittoria:

Indefinitely

Brett Turner:

10 year lock.

Joe Vittoria:

We will never ever go back to zero. No, that’s not true. No one knows.

Brett Turner:

Yeah, we don’t know.

Joe Vittoria:

Paul hit the nail on the head. The data is going to be entirely dependent and drive everything, but I would say the likelihood of us going back to zero, the further away we get from it is less and less and less. It’s not to say there’s no chance, but hopefully it’s not something that we’re talking about in our lifetimes again.

Brett Turner:

Well, let’s talk innovation. So one of the things too I still marvel at, we’ve known each other for a while now, is just, and a big passion of mine and what we’ve done at Trovata is just build something really new. We’re disrupting something, and you guys really have the opportunity to do this with inside JP Morgan as a big institution. It’s tough for the bank to innovate, not because it doesn’t want to, but there’s just a lot to that when you’re as big as they are. You guys did it. You guys pulled it off. So tell a little bit of the story, like building a product and just

We’re going to start with a diplomatic answer and then Joe, we’re going to go through the non, I think that’s a good way to cut it from here on out.

Paul Przybylski:

That sounds like a good buffer to have.

Brett Turner:

Should we start with non-diplomatic first?

Paul Przybylski:

Let’s go non-diplomatic.

Brett Turner:

Now that you can clean it up.

Joe Vittoria:

God’s honest truth, it was just a lot of blood, sweat and tears, a lot of design sessions, a lot of conversations, a lot of late nights. But really it’s because we started out with a clear vision of what we wanted Morgan Money to be, and we knew generally speaking what the ultimate goal was. So we had a bunch of very smart people sit around a table and have a conversation. A lot of us are still here. I’d like to count myself in that number, but it’s basically we figured out where we wanted to get to and then we would not be defeated. I mean, it was one of those situations that we had a very clear picture. We worked our butts off to make sure that we could get to the place we wanted to get to, and then went through the right channels through JP Morgan to just continue pushing forward until we made what I humbly believe is the best platform in the market today in our space.

Brett Turner:

And like you had said, passion, it’s really the first kind new platform really in 15, 20 years or…

Joe Vittoria:

Definitely.

Paul Przybylski:

Yeah. So listen, as you said, we’re a bank, right? Obviously we’re bank regulated. There’s a lot of bright people on JP Morgan that have a lot of ideas, but they just need a lot of time flushing out to ensure older rails are going on the right side. We were fortunate enough to Joe’s point, we had a very clear vision of what we wanted to build, and when we presented that to the senior management teams across asset management, it resonated because we knew exactly what we wanted to build. What we needed is the buy-in to go pursue that, which sometimes that is the hardest part in JP Morgan because it is a big place. There’s a lot of decision makers, a lot of influencers, and I think rolling out a global platform is also challenging because you have to deal with different jurisdictions. But at the same time, we were fortunate enough to have guys like Joe, guys like Dan and others on the team that as he passed himself on the back for his humbleness on the team, that really made it into their drive to push it there.

A lot of great ideas generally die at the first points of resistance. And as long as you keep pushing those walls and you got to work with your compliance team, legal teams, external legal, all these elements will end up eventually get you to a place that you want to be. It definitely wasn’t easy. As we go through internal committees, we make decisions, we make adjustments of those decisions, but at the same time, what you need to continue is to remember, am I doing the right thing for my clients? Am I doing the right thing for my firm and is it the right thing for my business? If those three boxes check, generally speaking, JP Morgan will support you in your direction.

Joe Vittoria:

And just to add a part of the non diplomatic answer, one of the reasons I think that we are so successful and we have been is that we do have differing views in the team. It’s not like everyone rose in the same direction. Is that we That’s

Paul Przybylski:

Shocking Jill to Hill.

Brett Turner:

Well, I was going to say it’s because you do have a gamer on the team. I do. That’s a weapon that others just can’t deploy.

Joe Vittoria:

No, of course. I understand. This generation

Paul Przybylski:

Gets it out in a minute.

Joe Vittoria:

I understand this generation,

Brett Turner:

Well, so if you think of that, how APIs have come on the scene, you said last two, three years is new. How is that impacting even? I know we’ve have an API built between our systems. It’s definitely provides that seamless experience That’s super cool. Has that’s come on, how do you guys think about that, where we’ve been and then even going forward, even opportunities, how that may open up and be leveraged?

Paul Przybylski:

You want to go first?

Joe Vittoria:

Sure. When we think about APIs, it’s a way that systems talk together. That’s something that has been around forever. The difference between 30, 40, 50 years ago, 25 years ago and today is we have a clearly defined system. It’s becoming much more prevalent across the industry. You can do so much more with API today than you could previously. And I think that there’s industry buy-in as we continue to move down that path. Let’s say some of the payment networks, some of the concepts of the traditional rails may or may not be replaced by APIs, and it’s because of their flexibility and their power behind them. You can do so much with an API. And so we’ve embraced that and really tried to drive that forward as part of our key tenants under the technology builds of Morgan Money.

Paul Przybylski:

Yeah, I mean, I think we’re still nowhere near where we should be. I mean, agreed. The fact that it takes a client 60, 90 minutes to get their money back after they redeem is absolutely insane in my perspective. So I think you got to get down to if API is supposed to be real-time transmission of or near real-time transmission of what the data load is, then it should be completely agnostic of what you’re moving. I think it’s great that what we have achieved so far with you guys and our broader API toolkit, but it’s still not enough in my perspective. We still haven’t gotten to the point where seamless payments are happening. Even more data is being transmitted for further insights to be managed. So I think we still got a longer way to go. I mean, I think we’re still using the other file formats in certain cases because in some other elements, clients are also just not ready to accept that. So we need to just also be aware that where we think is the right time or what the right API construct should be, doesn’t mean the market is ready at that time to do it.

Brett Turner:

So you said data, the data is sort of just running so many things right now and it’s going to continue to do that. So you, and you mentioned earlier, gen ai, it’s got to have data feed the beast, right? So how are you guys looking about at AI and Gen AI in particular through the Morgan Money platform? How do you guys think of this as you move forward? So

Paul Przybylski:

We already have AI running in the background where it looks at risk management when it comes to trading. So since we have API trading and our backbone is built on APIs, we can actually tell clients instantly by using our AI infrastructure that says, Hey, you’re either duplicating trades or you’re making some incorrect entries on the platform. Now that isn’t necessarily the front end gen AI because gen AI could run in the background or it can run in the front end where client can interact with it. And I think that is very powerful to have, which is you could have clients logging onto the platform and saying for account 1, 2, 3, 4, 5, 6, give me the dividend for the last six months, and it should be able to pull that and explain how the calcs were happened and at the same time give ’em the numbers so they can move on to their next task. We’re looking at those elements of ai. I think we’re at the early stages of that, but I do see a lot of application from our client base, but I also want to be smart about doing this within our platform because I don’t want it to be seen as a sophisticated chat bot versus actual ai. I think there’s a difference between those two.

Joe Vittoria:

Yeah, because a pulse point, we’ve seen a number of these things out there where AI is used for chatbots and you’re trained for four or five or six different things. We want to get to the point where it’s meaningful and you can actually leverage that AI as another employee. Now the key, you asked the question about data and how we’re thinking about leveraging it or how we’re leveraging with ai. So we’ve talked about our general data that clients are able to access, that’s fed into Trovata, all that sort of stuff. Now moving to the next use case, we’re talking about things, we’re thinking about things and sort of how we can potentially leverage that AI tool to build out other things that we don’t necessarily want to talk about yet.

Paul Przybylski:

That would be really cool. If you are able to log into our platform and based on your trading pattern history, the AI will say, you are here to place the following trade because of the following events have happened in your history. So here’s your stage, here’s the trade pre-stage for you. You got to deal.

Brett Turner:

We are talking about it. I didn’t talk about it yet.

Paul Przybylski:

You can go in so many different directions though. When you log into,

Brett Turner:

We’ve had everybody watching sign an NDA, so everything’s good.

Paul Przybylski:

I’m sure they did.

Joe Vittoria:

Makes perfect sense.

Brett Turner

That’s super cool.

Speaker 3:

But we talk about these things and actually doing them is a totally different world, right?

Joe Vittoria:

And also making sure that when you’re building them, you have the appropriate guardrails around them so you’re not then screwing the client.

Brett Turner:

How do you think though too? I think that’s the biggest thing is any kind of things come into finance, treasury, you’re talking about professional risk managers. Like that wall’s going to be, you got to prove it before they’re going to use it. And so how do you get over that go from being a toy to being this proven because accuracy is, they’ve been able to witness it, they’ve been able to live it, so therefore they’re going to allow it. How do you get through that curve you guys think on your business?

Paul Przybylski:

I mean obviously in our side it all starts internally drawing it up and then we have groups of folks we can bring this through to. They’ll pick their holes at it, and then once we are able to put it into production, what we normally like to do is have a couple clients come in and be our beta testers to really then have their teams of their risk managers to your point, pick it apart and then make edits that as we go. Because ultimately that’s how we built Morgan Money. It was completely on that kind of concept where it was rapid builds, fails.

Brett Turner:

Sounds like a startups

Paul Przybylski:

Kind of, it wasn a startup much. It was a startup.

Brett Turner:

Well, so I guess what would be, not revealing your hand too much, but what are maybe the couple of things you guys get most excited about that you’re trying to get to and provide that level of next level build or value for your customers?

Joe Vittoria:

Me personally, I’m excited to expand what we invest in, expand the universe, expand our offerings. Partner new product sets. Yeah, product sets, exactly. So right now we’re focused on money market funds, also short duration, short duration. But talking about the next step beyond that, how that fits in the treasurer’s world. I think partnerships are a big part of this, sort of making the life of a client easier. One glass is what Paul likes to say, where everything is sort of going through one central system or clients can leverage things. How Those are two of the ones that I’m most excited about.

Paul Przybylski:

Yeah, I mean, I would add a third. I mean, I love mobile. I am all about mobile technology and not just mobile in the sense that you can read your statement physically what you’re doing on the web version

Brett Turner:

With the experience in the mobile on the app.

Paul Przybylski:

So for us, that is a big push. I would love to tell you more about that, but sadly, since no one’s signed the NDAs, I’ll not tell you more about that.

Brett Turner:

Well, I’m most excited about the fact that rates are going to be locked in for 10 years according to Joe. I’ve already

Joe Vittoria:

Don’t bucket me into that I’ll get in trouble here

Paul Przybylski:

Too late Joe

Brett Turner:

Delay. No, it’s great. Well, of course we only have a couple minutes, Joe. We’ve got to tell the story. So I love the story. It’s a good story. You get a little bashful at it. I just think you’re being modest, but this whole story about you being like number one gamer, you’re a prodigy, not number one. It’s probably why Morgan Money is so cool, the weapon on the team to help make that happen. But tell us the, you got…

I guess, how many kids did you put into submission in your runup to becoming world number one in Warcraft? Or how do I phrase the question from you?

Joe Vittoria:

This point? Anyone that’s a gamer is going to understand this. Okay. It’s not an easy thing to say one or the other or the other, but I was technically by some website rated the number one World of Warcraft damage per second DPS warrior back in the original World of Warcraft.

Brett Turner:

That sounds absolutely badass.

Joe Vittoria:

I think that cool. My guild was Oh Snap client guild leader was sinner, and we were good. We were the first to clear aq. I had an ash kdi. I’m a giant nerd if you couldn’t tell. But yeah, it was just, honestly, I spent a lot of time playing this game as an 18-year-old.

Brett Turner:

As cool as that is. And they still let you on the Notre Dame football team too, so it’s a man of many talents.

Joe Vittoria:

Walk on to the Notre Dame football team. I had a lot of fun with a lot of things in my life, and now

Paul Przybylski:

A man of many talents.

Brett Turner:

I know. It’s great. Yeah, no, I think it shows up in all of the attributes of Morgan Money.

Joe Vittoria:

No, Paul’s built a really good team, let’s put it that way. We have a very, very strong team. And honestly, everyone,

Paul Przybylski:

They were all walk-ons.

Brett Turner:

Yeah

Joe Vittoria:

All walk-ons. Yeah. Dan is a national championship fencer. Katie still to this day is a national horse jumper. She just came back from a competition this weekend.

Brett Turner:

That’s so cool.

Joe Vittoria:

We’ve had a very strong team.

Brett Turner:

That’s awesome. You’re a tennis, tennis guy too, right? Yeah.

Joe Vittoria:

Was a division one tennis player.

Brett Turner:

There we go. All right.

Joe Vittoria:

We did pretty well.

Paul Przybylski:

Unfulfilled dreams that a lot of us have.

Brett Turner:

I love it. Yeah, well, I think all that chip on your shoulder adds to the, you have that if you’re an innovator. I feel like I’ve had that. Had to have that my whole career. So anyway, just great to spend some time with you guys. Always fun, Fred. Always a pleasure. And just super excited about what the future holds and things that we can continue to work together on. Definitely.

Joe Vittoria

Totally agree.

Paul Przybylski:

Thank you.

Joe Vittoria:

Let’s not talk about World of Warcraft ever again. Thanks.

Brett Turner:

We cut that piece out.