Not all payments can be processed at home: How one JPMorgan team managed

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In a city brimming with iconic images, it’s a new and jarring sight: New York’s real-time coronavirus memorials are the lines of white cooling trailers that silently announce the scale of the tragedy and serve as a reminder of the lingering danger. It’s also what lockbox employees at JPMorgan Chase see on their way to work.

“They are dealing with quite a bit. A lot of them have family members who have gotten ill,” said Michelle Conklin, head of receivables operations at JPMorgan. “There's stress and anxiety about going back into the office. But if it wasn’t for these employees there would be an enormous negative impact on the organizations that they serve.”

The virus has sent countless thousands — perhaps millions — of bankers, fintech workers and payment processors home, where they’ve been able to avoid crowding into offices, trains and elevators. But not all transactions can be handled remotely or digitally.

JPMorgan began sending staff home in March, part of a mass migration that eventually saw a majority of staff at most banks working remotely as the coronavirus lockdowns took effect across North America and Europe. Large payment processors, fintech merchant acquirers and card networks also sent most of their employees home around the same time.

Two refrigerator trailers sit in the loading area outside Montefiore Hospital in the Bronx borough of New York.

The receivables business at JPMorgan Chase is considered a “core” service, and its staff are the front-line workers who often serve the financial needs of other front-line workers who can’t work from home. These clients outsource their AR operations to the bank’s lockbox.

The bank’s lockbox staff process payments that fund payroll and other working-capital expenses for businesses that still operate manually or use paper checks. The client base of about 6,000 includes medical suppliers, food distributors and other health care companies.

These industries have been slow to automate payment processing, and can’t upgrade now because of the scope of the emergency. If the payments can’t get made, food can’t get distributed and could spoil. And in at least one case, the client is collecting payments to fund coronavirus testing. Other clients include labs that perform cancer screening. “There are also hospitals. Having uninterrupted payments is critical for them,” Conklin said.

The JPMorgan unit has about 4,000 staffers in 16 locations in New York and other cities. About 3,000 people are coming into offices.

The bank took steps to support the workers, including free food pantries for staffers and their families, enhanced cleaning at each site with particular attention paid to high-traffic areas and air purification systems, and on-site counseling. It also distributed gloves, face masks, hand sanitizer and cleaning wipes, and plans to provide face shields and disposable smocks in the near future.

Staff were also offered free alternative travel options for those who use public transit, such as ride-sharing apps or free parking. The office layout also changed to enable more spacing and minimize clustering in groups.

The road map to normal office work for JPMorgan and other large financial institutions is unclear. But Conklin said her division’s experience can guide other parts of the bank as offices reopen.

“We never left the office," she said. "As people come back into the offices, there are lessons that we have learned that can inform HR, cleaning, supply chains, etc. We’ll be consulting and providing feedback for the rest of the organization.”

For all industries, the virus response has partly been a reassessment of what can and can't be done in a centralized office. The 9/11 attacks drew attention to business continuity, and the virus has taken that concept further.

Financial institutions are grappling with how to return staff to buildings, but have mostly found remote work to be productive and smooth. Top executives from Visa, Mastercard, FIS and Fiserv have all said in recent interviews or earnings calls that remote work has gone well.

“Business has adjusted far better than anyone anticipated, given the fact that in a span of four to six weeks, Zoom and Google Hangouts have been used more for business than ever before,” said Sanat Rao, chief business officer and global head for Infosys Finacle.

When businesses do return to offices, Rao anticipates a “hybrid” approach where some work will come back to the office while some remains remote.

“This is a question that many big companies will be asking themselves: What can’t be done remotely?" said Gareth Lodge, a senior analyst at Celent. "There already have been some announcements by big firms where they’re assuming that working in an office will be the exception.”

Many payment processes can be done remotely and already are, Lodge said. The move to the cloud has reduced physical requirements, he said.

But mass remote work brings its own challenges.

“It creates a different set of requirements, to ensure that remote staff are not just secure, but how they handle sensitive information is also secure,” Lodge said. “Many organizations are not only increasing VPN bandwidth but strengthening the VPNs they use as well.”

Payment processing's physical footprint will rely on the level of paper required, such as checks and invoices, and likely the nature of the processors’ clients. Businesses such as health care are automating payments but still rely heavily in paper processing. And though the percentage of supply chain payments that are processed manually is falling, digital B2B payments are still not ubiquitous. JPMorgan’s lockbox customers will still need some in-person service, while at least a portion of merchants for all processors will need in-person onboarding.

But the overall migration to digital payments that preceded the crisis has digitized support for payments and merchant services.

Digital commerce companies have been aggressive about moving staff and client-facing activity to off-site locations. Shopify recently referred to itself as a “digital by default company,” saying most staff would work remotely indefinitely and that “office centricity” is over.

Shopify has accelerated its strategy to enable online sales for merchants, as businesses quickly develop digital strategies to serve people who can’t or aren't willing to shop in stores. And Stripe has encouraged its staff to work remotely.

Square, for example, reports 60% of Square for Restaurants sellers self-onboarded in 2018, a proportion that jumped to 85% in 2019. Twitter CEO Jack Dorsey, who is also CEO of Square, has said Twitter staff can work from home permanently, a policy that also extends to Square.

"We want employees to be able to work where they feel most creative and productive. Moving forward, Square's staff will be able to work from home permanently, even once offices begin to reopen,” a Square spokesperson said in an email. “Over the past several weeks, we’ve learned a lot about what it takes for people to effectively perform roles outside of an office, and we will continue to learn as we go."

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Payment processing Coronavirus JPMorgan Chase