The Treasury Tech Revolution: J.P. Morgan's Role & Insights

Brett Turner:

Welcome to FinTech Corner. Here we are at AFP, the Big Annual Treasury Show in San Diego and just really grateful to have two esteemed guests with us today, we have Lisa Davis and we have Ray Nazloomian from JP Morgan. So maybe just to jump right in, we’d love to just have you share a little bit of about your background, your role, and then we will kick off with some questions.

Lisa Davis:

Sure. Maybe I’ll start. So I’m Lisa Davis and I am the head of Digital channels and connectivity at JP Morgan Payments. My role is everything digital. I manage all of our channels platforms, including the portal, mobile solutions, our API solutions, our integrations and partnerships. And I’ve been at JP Morgan for about three years now and spent 22 years in the field overall. Prior to that, working at a few other banks, but happy to be here and thank you for having me.

Brett Turner:

Absolutely.

Ray Nazloomian:

Yeah. Thanks Brett. So Ray Nazloomian, I’m one of the leaders in our corporate development and partnerships team at JP Morgan Payments. So what that means is we work with fintechs and we partner with them to bring the best of JP Morgan and FinTech solutions to our clients. I also look after the JP Morgan Payments partner network, which is our ecosystem, all these third parties that we work well with our integrated with and offer that to our corporate clients as well.

Brett Turner:

Awesome. Well, here we are at a treasury show, lots of TMS vendors, the treasury management system. Talk a little bit about the TMS, about how you guys view that. You have many clients that are using those. What’s their feedback a bit about the state of the TMS space today?

Ray Nazloomian:

So obviously we have hundreds if not thousands of clients that are using TMSs, right? And we typically see clients start using TMSs for three main reasons. One is they become really complex, they have multiple bank relationships, and rather than logging into individual bank portals, they’re looking for a digital platform that allows them to do all their treasury activity across all their banks in one platform. So that’s one use case of why we see clients go start using those. Another one is where they might have larger treasury teams and they might be across different sites in different locations and they want to give some consistency around workflows and manage those workflows. Good structure. So everyone is doing the treasury operations in the same sort of way across their organization. So that’s another typical reason that we see clients start using TMSs. And then the third one is clients are looking for automation and efficiency and they want to get away from doing manual work and they’re looking for a digital platform that can help them drive efficiency across the treasury operations. Those are typically the three main reasons we see clients starting to use TMSs.

How do you think just where TMSs are at, I mean you look at the state of the market, you look at all the innovation going on, what are you hearing from clients about what do they like about it? What are some of the pain points? Obviously we’re really excited about working with you guys around starting to bring out something new and really address some of those things or maybe some of the bring out more innovation through the TMS space. Talk to me a little bit about just what you’re hearing for clients and then kind of next steps and how we could address that together.

Ray Nazloomian:

I think, when a client implements a TMS, it really becomes a fundamental component of their treasury operations. It’s almost a core infrastructure for their treasury operations. And when we talk to clients, I think the role of treasury or the tasks that treasury has to do hasn’t changed all that much in 20, 30 years. Treasury teams still need to do cash positions, cash forecasting, they need to manage inter-company loans, they need manage debt investments. So all the activities that they’re doing are still very much the same thing as it was 20, 30 years ago. But I think what has changed in 20, 30 years is the technology that’s available to them. Right now we’re talking about cloud, we’re talking about big data, AI, machine learning, APIs. And so I think clients are really excited about leveraging these new technologies and that’s where they’re using TMSs is they’re looking to those partners to leverage for them to start modernizing and use these technologies so they can reap the reward of some of these new technologies.

So I think, and that’s why we’re seeing a lot of TMSs is embarked on these journeys to modernize their platforms, to enable some of these things. We’re working with them as JP Morgan to make our APIs available to mutual clients in that platform. So I think there’s a lot of excitement around how TMSs can continue to innovate and continue to modernize to meet the new expectations that corporate treasuries have. If you think about everyone goes home in their personal lives and you’ve got these great applications that you use in your personal life, great experiences like in companies like Google and Amazon. But oftentimes I think when we talk to clients, they say that I come to work and I might be working in 20, 30 year old systems, and how do you get that same experience that you’re used to at home, at work in your treasury operations as well?

Lisa Davis:

I would also add that there’s a tremendous amount of disparateness in the client’s ecosystem where they may have a number of platforms that they work through ERP platforms across as they’ve grown and maybe have done mergers and acquisitions over time, and they haven’t always done the integration when they bring on new company a company for and for example. And so what happens is you have disparate that happens within that whole ecosystem where you have a number of different types of ERPs in the client’s environment that they need to be able to bring information together holistically. And clients are using TMSs to help do that, to help bring together disparate information almost as an overlay, if you will, to some of the complexity that they find across their ecosystems, almost a faster way to get to the data that they need to be able to do some of the forecasting and other things. And so we see TMS is playing a huge role from that perspective.

Brett Turner:

It’s a great point. I don’t think I’ve ever heard a treasurer or a CFO say, oh yeah, we have all of our integrations just down perfectly. Everything is just working beautifully. So that’s a great point.

Lisa Davis:

It’s often a struggle and it’s a long road. So if they don’t have a real sort of data strategy or even a one big data environment that they can absorb all this information, it becomes really difficult to bring all of that together. So TMSs have developed a really good sweet spot there, being able to absorb all of that, normalize it, and then be able to provide reporting at a level where a treasurer can really see things at a glance.

Brett Turner:

Well, I think the other thing in context, I mean you work with some of the biggest and therefore most challenging from a complexity standpoint, companies in the world. Absolutely. So getting all this together has huge implications, so it’s a big deal.

Lisa Davis:

Absolutely, yes.

Brett Turner:

Well, a lot of this is just context too, because we’re kind of setting the stage for, we had a great announcement last week, super excited to be working with JP Morgan and really take the partnership to the next level around the JP Morgan Treasury Workstation powered by Trovata. So we’re just really excited about that. Tell me a little bit about what we’re talking about, the state of the market things you’re hearing really, how can that really come in now at a time when a lot of companies are looking to solve and do more? How can it really address some of those things? What are you excited about where that can go?

Lisa Davis:

I mean, I’m excited about just the ought of the possible. Innovation has always been at the core of what we do at JP Morgan and partnering with Trovata just helps us to bring that to life and really provide solutions to our clients faster and in a way that helps that experience that our clients have. We always want our clients to have a wow experience with us, and in order to do that, obviously we need to be solving a problem for them. And so together we’ve been able to figure out, Hey, you know what? We have a tremendous amount of data at the bank and we can partner with, let’s say Trovata, to bring that data together as well as with multi-bank data that you guys are bringing together and that together in one solution for our clients. So what that does is it helps our clients to look no further.

They can really get a one-stop shop solution from us, which is kind of what clients are excited about. They have a lot of things to focus on, and our job is to try to make it easier for them to, the name of the game is ease of doing business. And so if we can make things easier for them so that they can go and focus on much more strategic and business decision making that needs to happen without having to worry about some of the stuff that it is pretty much our sweet spot. And so I’m really excited about this opportunity for us to be able to partner together to solve a problem for our clients, which is really around bringing information together from an analytics and reporting perspective, multi-bank information that clients are looking for, and then putting services on top of that so that it’s not just the gathering of information, but it’s like how can we make it real time? How can we make it meaningful to clients so that they can make decisions on top of that information? So I think it’s a sweet spot and I think it’s a really fantastic opportunity for us and a problem for us to solve right now.

Ray Nazloomian:

And I was going to just add to what Lisa said. Obviously we want clients to be doing more with JP Morgan, but we realize for whatever reason they might have other banks in their banking mix. And when you start getting into a truly multi-bank treasury environment, it becomes really complicated for clients for corporate treasury. And so we want to create solutions that not only help them solve things to do with JP Morgan, but how can we solve them? How can we help them solve the multi-bank challenge to help make their life easier as corporate treasurers?

Brett Turner:

And I love that approach. I think especially you look at 2007, 2008 when there was the great recession happen, there was just a lot of maybe rethinking about multi-bank started to even be more pervasive across a lot of clients. And you guys took this approach to really embrace that knowing that it’s going to, at the end of the day, give companies more a holistic view of their entire banking side. And there were some clients would have other banks that was just part of what went along with it. Another thing too that when you look at a startup mentor for me early on in my career had built this successful company and it took nine or 10 years and then he went public with this company and one of the investment bankers said, wow, you guys just came out of nowhere. And he says like, oh yeah, just a 10 year overnight success story.

So I think when you drive out these innovations, people will say, “Hey, where has this been? This is amazing.” But really it’s on the back of a lot of innovation. One of those is APIs. Like APIs is now such a key pillar. It embraces part of that multi-bank story. And what was cool about this is that we’ve got some history together. You guys were really, JP Morgan, really one of the first banks in the world to really that and have that aspect and build out a true public facing API mean that’s love to hear a little bit about. I mean there’s probably a lot of aspects of even how that came about, but a little bit from there and then the history of that and how that’s been where you kind of see that going forward as well.

Lisa Davis:

Yeah, sure. And as you said, Brett, we’ve been at this, JP Morgan’s been at this for quite some time. I think we saw the handwriting on the wall quite early in terms of what APIs were going to mean in the future and what the power that was behind APIs. And I think we weren’t exactly sure what we were doing in the beginning, I’ll have to admit that. But we knew that we had to do something right. And the one thing that we do at JP Morgan is that we give ourselves opportunities to explore and maybe fail fast if we need to, but to go out and explore what can we do with this technology? The technology’s not going anywhere. And we saw that it was developing more and more. And so we started out with internal uses of APIs. I mean APIs obviously serve a lot of different needs.

And just for our own modernization, we started using leveraging APIs to be able to do sort of bring information together machine to machine and that sort of thing. And obviously quickly realized that there’s an external use for this. We can provide APIs to our clients to help them with basic needs. Clients started to need more real-time information. They started to want to cut down on their processing and leverage just a simple API call to transact and for reporting and other things. So we started exploring early on and then we sort of tremendous uptick in our clients really saying, “Hey, this is really great. This is really cut down on a lot of processing a lot of time.” And we just kept going. And before you knew it, we had 70, 80 APIs out there on the market and clients were using them and TMSs like yourself, you guys were, were our first early user of some of our APIs. And then

Brett Turner:

Ray remembers we were doing this world first. We were also like, we don’t know what we’re doing, but we’re going to do it.

Lisa Davis:

That’s right. And we explored together and we learned together and some things we had to change along the way. It didn’t quite, it met the need at the time, but then as things kept going on, we had to change. But we see APIs as a core part of our ecosystem, both internally and externally. As I said. I mean, we’re modernizing our whole infrastructure, leveraging the power of APIs and microservices to be able to be more nimble, getting away from some of the sort of monolithic platforms that we’ve had in the past that have bank in the box kind of stuff and really sort of modularizing everything and then bringing it back together with APIs. And that allows us to then focus on providing experiences on the top end of that for our clients to meet their needs and really simplify experiences where we need to, or having much, a much more complex experience if that’s necessary, because we now have a backend that can just do APIs, pull that data together and pull services and processes together on the backend and really separate that from the actual experience that we’re building on the top end. So it’s, it’s been a great journey for us and we’ve seen the growth and we’ve seen how the power of it, and we’re just going to continue on that journey and sort of see where it goes. But APIs are here to stay and they’re really providing our clients with a lot of benefits.

Ray Nazloomian:

And I was going to say, the other thing that APIs has done, it is been a catalyst for innovation. So by having these APIs, we’ve had fintechs like yourself and startups and other tech companies leverage these APIs and create new innovative solutions on top of them as well. So it helps foster an ecosystem of partners that work well with JP Morgan, work well with our APIs and help enables them to create new innovative solutions as well that work well with JP Morgan, which I think is really exciting. The idea of creating an ecosystem around treasury and payments, helping spur innovation space.

Brett Turner:

And where do you see that, I mean, you use the word journey. I love that it just continues to evolve and grow. I mean, where do you see things going? APIs are here to stay just as things grow or there’s just maybe what are some of the opportunities that you see APIs still having a way to continue to address areas where clients are still wanting to automate? Where are we at in that evolution and then where do you see things going?

Lisa Davis:

Yeah, so a couple of things. So I think, so first there has to be a little more learning, I think that needs to take place from an API perspective. And what I mean by that, look, APIs are not the easiest thing to work with, and mostly our developers are the ones that really are the dominant user or the dominant buying center, if you will, from an API perspective. And so I think a couple of things. So one is the technology around how to develop and expose and interact with APIs needs to need to be a little bit more widespread in terms of the knowledge around how to use it and how to integrate it, what are the use cases around it? I think there needs to be a little more development in that area, but it is growing. I think that to the extent that we have, let’s say a developer portal that exposes our APIs a lot more work around really making the documentation simple and those sorts of things, I think is really going to give the market of APIs an uplift.

I think clients are just, I see a future where clients will go to, let’s say a JP Morgan developer portal and they’ll build their own solutions leveraging APIs on top of what we have there because we’ll make it just that easy for them to do that. I think that we’ll start to see a lot of companies leveraging bank developer portals to actually spin up smaller businesses and expose themselves to services that they would not have otherwise been able to get. But now because of APIs, they can easily get those services and attach them to their business and even bring them into their own ecosystem. And so I think it’s just going to really spark the idea f this continuous development, this continuous standing up of new services and new processes, and it’s making everyone a lot more autonomous in the sense that they can go and do things on their own. And I think that’s really the power of APIs.

Brett Turner:

Well, I mean, it’s really forward thinking too. I imagine too that even the aspect of embracing them and how much do you embrace them and just seeing that to now to a point where it’s probably knowing that it’s giving sort of that freedom to clients to do things. It’s varied forward thinking, but it’s probably in some ways a little bit creates a little bit of freedom for you at the bank too, of not feeling like you have to do everything. Or maybe you can focus on areas that you really want to focus on in terms of is that part of the

Lisa Davis:

Sure. Yeah, a hundred percent, right. I mean, at the end of the day, we still are a bank and we want to provide banking services, but now we have opportunities to two embed banking services where they need to be our model. Our ethos has always been to meet clients wherever they are on their journey. And we don’t always have to be the provider of everything in the sense that we have to actually do the work, but we can make things available for clients to do things on their own, which is just as good. And that helps us to focus on continuing to be more innovative and thinking through and being more forward looking about what’s coming around the corner, what’s coming next. Very cool while we enable clients to be able to leverage our systems, our services, our developer portal to do whatever they need to do and build on top of what we have so.

Ray Nazloomian:

Yeah, I was just going to say, it goes back to this idea of creating an ecosystem and how do we partner JP Morgan services with innovative companies that are creating innovative services and bring those to our clients? And so as innovation continues, as the pace of change continues, I think there’s value in having these tech ecosystems and FinTech ecosystem. That’s kind of what we’re aspiring to do with things like the JP Morgan Payments partner network, which is all powered by the APIs that we have that enable these third parties to create innovative offerings for individual niche customers and individual niche things that different companies, different industries might need.

Brett Turner:

What’s cool too, it just seems like everything is just accelerating in the world and you see that tech does that and APIs has been a part of that. So you mentioned right around the corner, so one of these things that happened early in the year is ChatGPT rolled out and it really did, it became quite a catalyst, captured a lot of people’s imaginations. I think the adoption or got up to a hundred million people were starting to use it right away. It was just one of these things that, and then people saying, “Hey, this is the biggest thing since the internet”, and there’s been all kinds of things said about it. There’s all kinds of folks that are actually playing around with it. So that’s coming on the scene. What really is the thought about it would love to hear just maybe even the early goings of, okay, what does this mean for us? And then how are you guys thinking about that now to contend with it and whether to embrace it or how to really weave that into what you guys are doing?

Lisa Davis:

Yeah, no, I think it’s an interesting question. And this whole concept of AI really is a topic that a few years ago it was a hot topic and then it sort of maybe took a backseat for a little bit. And now with the ChatGPT, it just kind is front and center again. So I think people are thinking, and the companies like us are thinking about, again, the ought of the possible around what can AI really do for us? I mean obviously AI is really about how do we take processes, human processes and automate them and make them available through some sort of digital way and ChatGPT was one of those things that people have a lot of interest in because it’s more natural language processing and you can speak and ask for something to be done and it’s done it’s

Brett Turner:

Magic.

Lisa Davis:

I was going to say it’s actually, it seems like magic, but behind that is hundreds and hundreds and thousands of APIs at the end of the day really going out and doing something and bringing together these micro surfaces so that any action can be performed at the speak of a point at someone’s command. And so it’s really all of these technologies really sort of coming together to create, like Ray said, right? It’s an ecosystem of technologies really coming together. And the concept of AI really, it gives us the ability to bring all of these things together to perform functions really easy and simple and really take a lot of the manual nature and the human processing out of things to allow for people to be more creative in other areas. And so you’ll see a lot of what we call rote functions, just being done through a command or typing in something very simple that, and you don’t have to think about it again, it just gets done. But just know in the back end of that, there’s a lot happening.

You have to have the ecosystem on the back end and all of that’s going to be driven by APIs from my perspective. And I think the future of this is just going to continue. Ray had mentioned earlier when you think about your own personal life, everything that we do personally is fast. It is right in the palm of our hands. We can press something or go to an app and get things done very quickly, and we take that same mentality into our work environment and everything that we do. And so providers, companies that are large providers of services need to be thinking about that, right? And AI and APIs and technologies like ChatGPT and all of this together will help us to create that type of environment where things can get done very quickly, very easily and free up time for managers, leaders, entrepreneurs like yourself to go and develop the next best thing and just expect that some of these other things will just, AI will allow them to just be done in a very automated way. And then we have to figure out how to control all of that. That’s a whole other topic.

Brett Turner:

We’ll save that for the next podcast.

Ray Nazloomian:

I was just going to add back in 2018, we put out this thought leadership that said the future of treasury was going to be a self-driving treasurer where you’d have this future nirvana where AI models would run the treasury operations and humans would just play a role in terms of optimizing those models and maybe managing exceptions. And so we’re sitting here today, we’re clearly not there yet, right? There’s still a lot of human intervention in that process, but if you think about particular treasury workflows, we have seen progress in AI solving for that. If you think about cash forecasting, we do have use cases where AI has helped optimize and drive efficiency in cash forecasting. You think about tagging transactions, you think about fraud management, you think about some of these activities. So there are particular use cases where AI has been able to solve real problems and drive real efficiencies, but we’re still, while away before this idea of a truly self-driving treasurer, we will probably get there eventually. It’s going to take some more time as technology matures and it helps come to market within the treasury context as well.

Lisa Davis:

And I really like the thinking around fraud that’s on everybody’s mind. We’re here at this conference and most of our clients are really asking about what’s new and from the fraud protection perspective. And I think to Ray’s point, I think AI is really going to be front and center when it comes to being able to detect suspicious behavior of being able to react to it very quickly. We have sort of rules-based sorts of activities that we can put into our platforms now, but I think we’ll go way beyond that and become much more advanced in terms of how do we even understand something when it happens right at the time than it happens and be able to take an action right at that time to be more preventive and not sort of backward looking and saying, oh, this thing happened already. Now I got to figure out how to deal with it. Now we want to be in front of that. We want to be able to try to predict things that could potentially happen based on the set of patterns that we’ve seen leading up to that.

Brett Turner:

Love it. Yeah, that’s super exciting. And the next question I had, you literally answered them without me even asking. I mean, just the practical implication of where this is going. I know, yeah, that’s a lot of people’s minds. I think. I love how you said too, it’s like, yeah, you don’t just flip a switch and do AI. I mean all the work that it takes to really build off of that backbone to be able to deliver those kinds of things. So it’s good to hear that you guys are doing that. You kind of see that bright future of where that’s going. It’s cool to hear some of your thoughts, Lisa, on where AI’s going and that’s even predictive kinds of things that you guys see down the road is really, really cool.

Lisa Davis:

Absolutely.

Brett Turner:

Thank you so much for joining us and great, great to be speaking with you guys.

Lisa Davis:

Thank you for having guys.

Ray Nazloomian:

Appreciate it. Alright, thanks.