JPMorgan Chase & Co. is investing more in people and technology in its bid to build up its global trade finance business.
The New York banking company plans to expand its trade business into Asia and Latin America, which it says present more growth opportunities than North America and Europe. It has hired several executives to steer its business in each region, and it will soon begin a four-year technology investment program aimed at supporting new clients.
Leading its new team is Daniel Cotti, hired a year ago as the global trade executive for JPMorgan Chase's treasury services business. The company has hired 50 executives in 2010 to strengthen its trade business and plans to hire another 50 by yearend.
"We want to build a business that holds for the next decade or longer," Cotti said. "That business needs to be supported by an IT infrastructure that is new technology, and not end-of-life technology."
Cotti would not say exactly how much it was investing in the global trade initiative, but he said the money was part of a $1 billion investment plan JPMorgan Chase announced two years ago.
It plans to "reinvent" its infrastructure, "bring it up to speed, increase our front-end systems and build client dashboards, something that we don't have today," Cotti said. "So a good portion of the investment will also go into technology enhancements and replatforming."
The effort primarily targets current and prospective multinational clients. One goal is to present the same interface and capabilities to clients in all regions, Cotti said. "Wherever the client deals with us, the experience will be the same."
After multinational companies and their subsidiaries, JPMorgan Chase will focus on commercial bank clients from North America, then local corporations, and then other banks.
Cotti said the trade business has the ability to attract these clients and connect them globally. "Trade is very often an entry product for banks to acquire new clients in these emerging markets," he said. "Then you have ample opportunity to cross-sell other banking products." Nancy Atkinson, a senior analyst with Aite Group LLC in Boston, said JPMorgan Chase's push "is a pretty big deal in terms of the commitment being made," but she did not agree with Cotti that trade usually leads the way. "It's very seldom that trade finance is the lead product," she said.
Otherwise, the company's approach is sound, Atkinson said. "What JPMorgan is doing is what needs to be done."
The added 100 professionals is significant. In a 2008 survey of banks in the trade finance business, the largest group, 47%, said they had 100 to 500 full-time employees in their trade group.
JPMorgan Chase's plan, announced Thursday, resembles a Wells Fargo & Co. plan unveiled Tuesday, Atkinson said. Wells said it is expanding its global banking business to provide better service to international companies based in the U.S. and elsewhere, with a focus on treasury management, trade finance and other services. Wells Fargo's new global banking group has opened five sales offices in the Eastern U.S.
"Now may be the time for trade finance announcements by banks," Atkinson said, but Chase's move "seems far more aggressive." That carries risks, Atkinson warned. "I actually think they're taking a bit of a bet on the future, which is not necessarily a bad thing."
"I still think we're having a hard time seeing a real market change as a result of these kind of announcements … you don't hear constantly of new deals or new banks signing up," Atkinson said, but the company is "definitely moving forward."
The new hires under Cotti include Pravin Advani, the managing director and global trade executive for Asia; Andrew Betts, the managing director and global head of supply chain; David Conroy, the regional trade executive for North America and global trade sales head; Andrea Leonel, the regional trade sales and adviser head for Latin America; Kao Fang Ming, the trade head for China; and Prashant Pillai, the trade head for India and South Asia.
Cotti's team also includes Jeremy Shaw, its regional executive for Europe, the Middle East and Africa; Mike McKenzie, its regional treasury and securities services executive for Latin America; and Michael Quinn, its global head of traditional trade. Though JPMorgan Chase highlighted its hires for Asia and Latin America, it has also been expanding the teams that cover in Africa, Europe and the Middle East.