JP Morgan: removing friction from cross-border payments
Speaking to us from her office in Singapore, Christine (Jang) Tan has just returned from Sibos – the landmark financial conference held in Amsterdam. It’s a big event for JP Morgan. In fact, several of the company’s executives participated in panel discussions and debates at the conference, which was held in person for the first time in three years.
JP Morgan showcased Confirm powered by LIINK, a global account validation service designed to improve the efficiency of cross-border payments. Verify runs on the ONYX platform, the firm’s blockchain division. Confirm is the world’s first bank-led, production-grade, peer-to-peer blockchain network that has the ability to verify over 2 billion bank accounts from over 3,500 financial institutions1,2.
“We drive solutions that meet the demands of customers globally – that means they need to be nimble, nimble and frictionless,” says Jang. “We have that capability, as we can leverage global infrastructure and incorporate local best practices into our solutions, tailoring them to the specific customer and industry segments, including strategic partnerships to enable an end-to-end payment ecosystem. We also presented our cross-currency proposition tailored to banks, fintechs, corporates and non-bank FIs.”
JP Morgan, led by the ONYX team, also attended the Singapore Fintech Festival. As a central foreign bank, the team works closely with various central banks around the world, including the Monetary Authority of Singapore. The aim of this is to support new areas of innovation that utilize blockchain technology, with the aim of enabling the movement of money to be faster, better, more cost-effective and take place in a secure way.
Jang works in JP Morgan’s payments business and leads Financial Institutions Group Sales in APAC. Not only is Payments a key part of JP Morgan’s push to redefine the future of finance, APAC is also a region that has historically been at the forefront of real-time payments innovation and continues to be a torchbearer to this day.
Impressive credentials underscore JP Morgan’s scale
“We operate with a presence in the country in 16 markets,” says Jang. “We support 18 markets from a customer segment standpoint in Asia.”
And then of course they move their streams on a global basis. In APAC alone, the payments business operates hubs in Manila and Mumbai, which facilitate some of the treasury services and trade processing that JP Morgan performs on behalf of its clients.
JP Morgan is regarded as the largest clearing bank for US dollars globally, processing nearly USD 10tn per day in payments.
With such large volumes at stake, the company is well aware of its responsibilities around cyber security and the protection of customers’ money. “This cybersecurity aspect is very critical, and in our relationships with all the banks, it’s one of their top priorities — to have not only a trusted partner who innovates, but the ability to execute securely,” says Jang. “That’s very critical, especially in Asia where you have a lot of central banks, as well as regulators and a complex landscape.”
Pure volume means that cyber becomes the main focus
This duty of care comes with expected levels of best practice: both large financial institutions and emerging fintechs expect their partners to behave impeccably, especially when it comes to complying with legal and regulatory obligations or protecting systems from attack. “Although we share best practices, we also expect the same from the companies [that we partner with] actually follows certain standards. It’s really to protect the whole community.”
Looking at how JP Morgan is likely to invest its resources in the future, Jang says: “We have to continue to evolve and there has to be a cyber component that we continue to invest in. On blockchain, the use cases will continue and we have leveraged Confirm as one of our applications for banks, non-bank financial institutions, enterprises and fintechs.
“We also recently had the announcement with VISA B2B, who will leverage Confirm to facilitate their cross-border payment flows as well.”
When you’re working at such an astronomical level, it takes some shining stars to inspire you. Within JP Morgan, Jang says she looks up to Takis Georgakopoulos, the global head of JP Morgan’s payments division. “He was previously my boss when he ran the MNC’s Corporate Banking business, and brings a unique strategic background to his current role. His vision to bring together four discrete businesses under one Payments umbrella is what sets us apart today, and does enabling the bank to offer end-to-end deposit, disbursement cash management and trade finance capabilities to our customers.Today we process nearly USD 10tn in payments daily in more than 120 currencies and across 160+ countries worldwide and we are just starting this journey.”
Jang is a native of Singapore and also draws inspiration from the country’s late founder and first prime minister, Lee Kuan Yew. “MR Lee put Singapore on the map and the financial industry thrived under his leadership,” says Jang. “It has grown as a major financial hub globally, so I am truly inspired by his journey in leading the country.”
JP Morgan’s “three Cs” approach to payments
Within the payments business in APAC, JP Morgan uses an approach that Jang calls the ‘three Cs’: client, partner and competitor.
On the customer side, the firm is obsessively focused on innovation to support its customers with the rollout of new features and functionality. JP Morgan is one of the founders – along with Singaporean bank DBS and sovereign wealth fund Temasek – of an entity called Partior. The vision for Partior is to facilitate multi-bank settlements on the blockchain in several currencies. The firm has facilitated direct transactions settling Singapore and US dollars, and is in the process of adding settlement banks to accommodate more currencies – including the euro, Japanese yen and Chinese renminbi.
For JP Morgan, collaboration is the key to growth in the payments business. A good example is the partnership with the European car manufacturer Volkswagen to create Mobility Payments Solutions, focusing on the future of cars and how payments can drive innovation throughout the car segment. The company continues to look at additional partnerships that it can leverage in Asia – whether with fintechs, aggregators, financial institutions, non-banks or corporates. The firm also completed strategic acquisitions and alliances with Cleareye.AI, and the most recent partnership in the region was with In-Solutions Global (ISG), a leading provider of payment solutions.
“These are collaboration aspects where we will look at whether we want to partner with them, invest in them, and then leverage their technology to support our solutions at the end of the day,” explains Jang.
Finally, when it comes to competition, JP Morgan does not allow its size or scale to cloud the judgment of its rivals in the market. “Obviously we face competition, with fintechs these days becoming more prevalent,” elaborates Jang. “But I think it’s healthy to have competition. At the end of the day, it’s about benefiting consumers who have the ability to choose payment options – whether it’s through banks, wallets or fintechs. And JP Morgan wants to be part of partnership that delivers for customers.”
Blockchain a key driver behind payments
Jang is a strong believer in the possibilities that blockchain brings, and expects the decentralized technology to form a key pillar of JP Morgan’s strategy as the company prepares for the future of payments. Jang explains: “We are working globally on opportunities to leverage the technology and use them for various requirements and solutions – whether it is on the market front, tokenization, real-time movement of money and cross-border payments.”
In addition to using SWIFT and ISO as payment rails for cross-border transactions, JP Morgan seeks to improve real-time data sharing with Liink – the world’s first bank-led, production-class, peer-to-peer blockchain network for information sharing – and Confirm, an application for global account validation. This will reduce the time scale for the banks, reduce labor-intensive tasks that have to be performed manually, and at the same time reduce rejection rates.
The company is working with many different companies to facilitate the cross-border exchange of this data to different corridors, especially when it comes to remittance demand related to foreign workers, who want to send money home to markets such as Indonesia, India, Bangladesh and Sri Lanka to support their family and local community. JP Morgan expands its service to the Philippines, Vietnam and Thailand.
Looking ahead to a promising future – one in which JP Morgan will undoubtedly play a central role – Jang sums up the sharp focus of the Asia Pacific payments team: “We believe that seamless and secure payment solutions can help our customers and their businesses grow, diversify and thrive by enabling companies, financial institutions and consumers to pay anyone by any method or channel from anywhere, at any time.” It’s not a simple recipe – end users want it all, and they want it now – but if any company has the experience behind it to make it happen, it’s JP Morgan.
