As businesses increasingly embrace automation, JPMorgan Chase sees a battle brewing among banks and technology companies to provide a marketplace of payments-related services for corporate clients.
JPMorgan has launched its Payments Partner Network in collaboration with Salesforce to enable merchants and other corporate clients to access products from third parties that have integrated with JPMorgan's payments platform. The bank's goals for the network include reaching businesses of different sizes and categories, as well as reaching a wider range of staff within each business.
"Payments are no longer a back-office decision," said Jason Tiede, global head of corporate development and partnerships at JPMorgan Payments. "In the past a treasurer or a [chief financial officer] would make a decision about a banking or a payments partner. Now we're seeing chief engineers, technologists and heads of digital becoming more involved."
JPMorgan's payments platform already supports merchant services, treasury management, card issuing and trade finance. The bank has hundreds of integrations with outside companies that sell business-management products. These integrations cover dozens of industries and enable hundreds of use cases.
The Partner Network is an initial step to combine these integrations in a single location that businesses can use to search, view and add products and services while remaining inside JPMorgan's payments network. The beta launch includes about 60 integrations in the U.S., with the bank adding more partners and regions shortly.
"It's analogous to an app store in the consumer world," Tiede said, adding that in the beta launch, the Partner Network will be primarily a discovery tool for businesses to spot service providers, with more functions added over the next few months.
As part of its Salesforce collaboration, JPMorgan also debuted two connectors to the Salesforce AppExchange, one for business-to-business commerce and order management and another for business-to-consumer commerce. The connectors enable firms using Salseforce's Commerce Cloud to access JPMorgan's gateway to support consumer payments, settlement and other payments processing tasks on behalf of businesses.
"If a client is looking for a treasury management system or a commerce gateway, they may actually find a company that they are considering is already integrated with JPMorgan," Tiede said.
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JPMorgan is one of the first banks to build a merchant technology marketplace. The bank competes with payments technology companies such as Block, PayPal and Stripe, which have added financial services such as short-term merchant credit over the past several years. Other payment processors such as Adyen have also added more financial services to compete with incumbent banks.
"JPMorgan doesn't need to own these services," said Daniel Keyes, a senior analyst at Javelin Strategy & Research. "But in this case, JPMorgan could lose the payment share that it already has if the bank doesn't provide access to these other products."
As businesses migrate away from paper-based processes, banks and fintechs are
"Collaboration is key in the payments business. You are no longer building gardens with high fences," Tiede said. "This allows us to reach clients with a tech-forward approach while competing against the pure-play fintechs in payments."
"There are pros and cons to these types of marketplaces. They provide a nice catalog of easy integrations, which can help deepen relationships and attract new ones," said Aaron Press, research director for worldwide payment strategies at IDC Insights.
There is a class of customers that will like the ease of choosing from pre-screened options that can be up and working fairly quickly, Press said. "But marketplaces can also be limiting, as they may not have one or more options that someone is looking for, which could frustrate current customers or turn some prospects away."
The competition to build marketplaces will require scale and likely a substantial technology budget.
"Any organization looking to build an app market will have to put significant resources behind recruiting, onboarding and retaining participants," Press said. "And that's true no matter what industry the marketplace is targeting."
While smaller banks and credit unions are not necessarily shut out of the merchant services marketplace competition, JPMorgan and other large banks have an advantage due to their scale.
"It's not exclusive to bigger banks, but it's certainly easier for them. They have more partners and the power to build up relationships," Keyes said.
