JPMorgan Chase turns to fintechs to accelerate B2B innovation

APIs have opened a window for banks to capture a greater share of business payments, leading JPMorgan Chase to seek partners for faster results.

JPMorgan Chase has worked with fintechs such as Trovato.io, a San Diego firm that automates cash management, and FI.SPAN, a Canadian company, to power integrations with enterprise resource planning systems, starting with NetSuite. JPMorgan Chase’s goal is to enable payments and other business services without repeated logins to different systems and costly and lengthy technology implementations. The bank’s product, Treasury Ignition, offers what it calls an “end to end” wholesale payments experience.

“It’s an ecosystem play where JPMorgan and our fintech partners will deliver banking capabilities in the client’s own Enterprise Resource Planning (ERP) environments,” said Jason Tiede, a managing director at JPMorgan Chase and head of the bank's innovation team for Wholesale Payments.

JPMorgan Chase has built a NetSuite plugin that initially included functionality to enable clients to pay their vendors directly through their ERP. Examples include a list of bills a business wishes to pay, such as invoices and vendor payments — and the payment method, such as ACH, wire or check. A “pay bills” button executes the transaction.

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The user interface also includes a history of those payments, along with the status and balances that update in real time. The plugin enables users to reconcile statements without switching between the bank and NetSuite.

NetSuite offers a range of ERP modules to help clients manage their businesses. With JPMorgan‘s Treasury Ignition they can seamlessly embed the banking experience into the ERP dashboard.

“The ERP is the lifeblood of the treasury and finance departments, where clients are performing their core cash management and reconciliation work — invoices, receivables and payables,” Tiede said.

By working with the fintechs, JPMorgan Chase was able to use their payment expertise to develop a new product that makes a treasurer’s workflow easier to manage and more automated. The bank’s partnership and investment in FI.SPAN, began by working closely with Lisa Shields, FI.SPAN’s CEO and the former CEO of Hyperwallet.

“A key element of the story is to behave like the technology and high-growth companies we’re targeting with Treasury Ignition — nimble and customer-centered,” Tiede said. “By partnering with FI.SPAN we were able to take this from idea to live product with approximately $1B in payments flow in less than 18 months.”

JPMorgan Chase has made several recent moves to improve its B2B payments business. Its JPM Coin brings the power of blockchain to the bank's Treasury Services business, which processes about $5 trillion daily; and its Merchant Service business, which processes more than $1 trillion each day. JPMorgan Chase also joined the Visa and Billtrust Business Payments Network, which supports a directory of suppliers who accept digital payments.

B2B payments have long lagged consumer transactions in automation, partly because of complexity. Supply chains involve more parties in more locations, and the transactions are more complicated. Banks and fintechs have responded by embedding payment processing in other functions, such as billing dashboards or enterprise resource planning systems.

Fintechs and banks are under pressure to tie payment execution more closely to business functions such as treasury management, supply chains or accounting. At a recent Federal Reserve symposium in Chicago, Ryan Masters, executive director of strategic relationships at Swift, said the growth of contract work has created streams of more frequent, smaller-value payments that strain traditional B2B business models.

Writing for PaymentsSource, Steve Robert, co-founder and CEO of Autobooks, argues businesses need to find an easy-to-use integrated way to accept multiple forms of payments, including ACH, credit, debit, check and lockbox in digital channels. The migration can eliminate paper and tedious internal business tasks, Robert wrote.

That’s led technology companies such as Bill.com to add virtual cards to automate accounts payable for small businesses through partnerships with American Express and Mastercard. Another company, Coupa, has brought elements of the “gig economy” to B2B payments by building a suite of transactions and supply chain management under a single payment experience.

The lure of the benefits of these integrations has created a race among providers, since businesses will want to consolidate treasury management relationships.

“Corporate clients absolutely value tight integration with ERP systems. The ability to integrate with multiple ERP systems is a must for some B2B services such as integrated receivables and forecasting,” said Erika Baumann, a senior wholesale banking analyst at Aite Group. “Without the ability to pull in the underlying data from ERP systems for forecasting and cash positioning, the output is not accurate.”

For integrated receivables solutions, one of the key components of a solution is the ability to integrate with multiple ERP systems to automatically post payments, according to Baumann. “This is becoming more important as the payments landscape is maturing and becoming more complex,” Baumann said. “Banks that can do this well do have a competitive advantage. Banks are also getting disintermediated by nonbank providers for some of these solutions.”