February 25, 2009

J.P. Morgan's ($2.2 trillion in assets; New York) treasury services business announced in early February went live with the first phase of enhancements to its Global ACH service, the bank's international mass payment operating platform.

With the upgrade, J.P. Morgan's clients will see later cut-off times for receipt of payment instructions. There will also be intelligent routing, which automatically selects the most expeditious route if a cut-off is missed. Clients will also have access to full SEPA credit and debit services across all their J.P. Morgan accounts domiciled in Belgium, France, Germany, Ireland, Italy, Netherlands, Spain, Switzerland and the UK.

A J.P. Morgan spokesperson told BS&T that enhancements range from the general to the specific. The payments system offers greater scalability so the bank can process transactions for clients with the highest volumes and those with more modest transactional throughput. The first phase is compliant with SEPA Rulebook 3.2 changes introduced last summer governing the structure of SEPA credit transfers.

Although the bank would not provide a specific name, the spokesperson notes that the system itself was vendor-built. According to the bank, "We ensure that all impacts on the customer experience are positive. For example, our intelligent-routing system automatically selects the most appropriate alternative method if cut-off times are missed. Furthermore the new SEPA capabilities have been seamlessly integrated into the Bank's web-based channel, J.P. Morgan ACCESS. There have been no mandatory client changes."

Phase 2 of the payment system rollout is planned for the third quarter. New features will include a full SEPA Direct Debit offering ahead of industry launch; enhanced local ACH payment and collection capabilities in the UK and Germany; a bulk credit web-based reporting option to ease the reconciliation of high volume receipts; and further upgrades to the Faster Payments Service in the UK.

The enhancements are all part of a larger $1 billion expansion plan announced by J.P. Morgan last fall to bring its cash management and treasury liquidity capabilities to the next level, expand its global footprint and reinvest in its technology solutions.

Treasury services in general are perhaps one of the few silver linings in the current economy, according to Boston-based Aite Group. The firm conducted a survey of 23 treasury professionals representing 22 of the 100 largest North American banks. According to the findings, 96 percent of those polled said treasury services is increasing in importance to their financial institutions. Aite says if banks properly leverage their treasury services groups, their ability to grow deposits promises to bring some stability to the market.

"With increasing responsibility for working capital management, treasury has become a far more integral and strategic component of companies' financial supply chain than it was just a few years ago," says Judson Murchie, analyst with Aite Group and co-author of this report, in a statement. "Banks that wish to ultimately succeed should focus on growing on-balance sheet deposits, increase emphasis on international capabilities; create differentiators; shift to a client, rather than product, focus; leverage technology partners to support sales, analytics and improved customer service; and streamline systemic interfaces between the bank and its commercial customers."

Some of the initiatives associated with the J.P. Morgan's treasury services growth plan:

  • The launch of a single, global platform that will provide clients with greater transparency into their treasury activities, and will allow them to manage their cash more efficiently across regions;
  • Expansion of its international payments offering that will deliver global scalability, support multiple clearing options and expedite payment delivery;
  • An investment in an enhanced financial supply chain offering that further combines J.P. Morgan's trade finance, logistics, dynamic discounting and electronic invoice settlement capabilities;
  • The new global availability of its freight payment and auditing capabilities, providing clients with an integrated, multi-currency cash, trade and logistics solution unmatched in the industry;
  • Enhanced investment in its range of sterling and euro denominated commercial and prepaid card solutions;
  • A new Asia offshore clearing network that allows clients to keep liquidity in the region, clear in multiple regional infrastructures, consolidate cash balances and benefit from same-day finality;
  • Addition of new International Image Deposit Centers in Bahrain, Jakarta and Pakistan, strengthening the firm's imaging capabilities in Asia and the Middle East;
  • The introduction of J.P. Morgan's Web-based accounts receivable management application to EMEA and Asia Pacific clients enabling them to globally reconcile receivables.
ABOUT THE AUTHOR