JPMorgan Sees 2022 As Year of Connectivity, Predicts Rise of ‘Anything as a Service’

It’s natural to think that there’s a clear demarcation point dividing what went before and what comes next as a new year dawns.

Julie Lubell, global head of trends and intelligence advisory at J.P. Morgan, told PYMNTS’ Karen Webster that some of the trends that will be top of mind this year also have roots in the pandemic, transformed B2B and B2C practices and will linger on long after 2022 fades from memory.

In a nutshell, the five trends that the company is watching right now as it seeks to bring treasury management professionals and client firms more fully into the digital age include: Digital as a culture; anything-as-a-service; payments as a revenue driver; aligning working capital and liquidity; and addressing environmental, social and governance (ESG) initiatives. 

The one theme that permeates all these trends is connectivity.

Working Capital and Liquidity 

While navigating the worst months of the pandemic was challenging for corporations, many have of them have left survival mode in the rearview mirror. 

Now, she said, companies need to figure out — and take advantage of — new opportunities to maintain or create sustainable growth for their organizations. No matter the firm or the vertical or the digital experiences enabled, Lubell said working capital is key. 

“Funds need to get where they need to go when needed, for an enterprise to maximize the benefits,” she said. Liquidity is a critical component of fund flows.

And liquidity management, Lubell said, demands real-time connectivity with an added layer of always-on convenience in a 24/7 world. A company that is operating globally, she said, should have automatic foreign exchange (FX) rate changes take effect when moving funds from one location to another, avoiding having to stutter step between two systems. 

She said that application programming interfaces (APIs) could go a long way toward connecting banks and enterprises and fund flows across borders even as they grapple with the legalities and practicalities of compliance and time zones.

Connectivity, of course, breeds a massive amount of data that can be harnessed and used to improve goods and services. Financial institutions (FIs) have moved from customer relationship management systems to data lakes to data oceans.

Said Lubell: “We’re looking at data in a much more holistic way. And rather than looking at data department by department, we’re looking at the entire customer journey, from start to finish.”

Digital as a Culture

With capital and a digital roadmap in hand, firms can embark on embracing digital as a culture. This movement goes well beyond the confines of the user interface and even beyond the four walls of the business itself.

As Lubell noted: “Everyone’s got an eCommerce site — but now the question is, how well have you connected this throughout your business?”

A firm needs to have a customizable digital experience so that clients or users can go online and self-select. On the enterprise side of the equation, the data from the UI and point-of-end-user interaction has to translate back to the supplier to ensure they have all the right information (which results in efficient inventory management) and even gets that supplier paid (through digital channels of course).

In this way, she said, the entire supply chain now becomes fully automated, where once it was segmented into separate silos.

Getting there, of course, requires a massive change for enterprises, a change that encompasses processes and not just technology. Changing those processes, she said, means getting a broad range of departments to talk to treasurers and the finance executives in the back offices — all in a bid to consider, and collaborate, on how apps and platforms will look for the end users.

Anything-as-a-Service — in B2C or B2B

That collaboration needs to start at the beginning of the digital journey — with a holistic end-to-end focus can change the way consumers interact with brands and vendors work with client companies.

Lubell said that the pandemic has forced firms to realize that anything can be rendered a service. The key to creating something as-a-service is convenience, where consumers or businesses can request items or services and they can be tendered to them in the most convenient manner, across the most convenient channels.

Thus, a consumer can pay for a latte on the way to the office, with mobile order-ahead and voice assistants; a prescription service can have medication delivered directly to the patient’s door. Taking components and linking them to other parts of the value chain or distribution can give customers a more convenient and frictionless experience. Embedding payments into the mix can transform all manner of commerce — not just the consumer-facing kind, but across B2B as well. 

Since the pandemic, she observed greater numbers of buyers and suppliers, up and down a host of B2B verticals, had online marketplaces of their own. They traditionally had to ship their products out to brick-and-mortar destinations to reach the end consumer, said Lubell, but now with the greater adoption of technology and digitalization, many are rethinking how they can leverage this to expand upon their value proposition.

“Now they have to think about the online commerce opportunity,” she said, “because that is what users are looking for in order to make their purchases.” That means examining how their suppliers want to be paid, across currencies and even cryptos.

With anything as a service, she said, FIs are ensuring that their enterprise clients have the technology capabilities and payment schemas they need to communicate efficiently and in real time with their own vendors. The hypothetical widget maker that finds out its factory in Germany does not have the necessary inputs to make a widget can change its orders and payments seamlessly to the factory in Belgium that does, automatically.

“You can pivot without the faxes, the manual processes, and the phone calls — not to mention lots and lots of delays,” said Lubell.

Offering new ways for enterprise clients to reimagine their businesses has (naturally enough) been spurring banks to align processes with their own vendors and suppliers. Lubell pointed out that FIs like J.P. Morgan examine clients (and its own departments) in three buckets. The “discovery” bucket entails examining manual processes; the transformational bucket focuses on digital solutions and APIs. The third bucket, the visionary bucket, is tied to connectivity, which leverages machine learning, artificial intelligence and blockchain, to name a few.

“We’ve been observing clients in the discovery stage are moving very quickly to transformation or even past it, and reaching toward the visionary stage faster,” she said, as they realize the value that is inherent in their data.

Payments as a Revenue Driver

Done strategically, and aided by advanced technologies and data, maintained Lubell, firms can embed payments into their operations, and payments can be a revenue driver for businesses and industries that previously might not have seemed all that scalable. 

(There’s been a side benefit, too, for the firms that bring payments fully into their experiences: Lubell noted that there had been more unicorns, high-tech firms valued at more than $1 billion, than ever before.)

The car, to name but one example, becomes the ultimate form of mobile commerce, a digital wallet on wheels. Lubell pointed to the 2021 announcement where JPM acquired close to 75% of Volkswagen’s payments unit.

Read also: JPMorgan Acquires 75% of Volkswagen’s Payments Unit

 The data gathered from plugins tells the insurance company how a consumer is driving; that data can be sold and used to adjust insurance rates. The coffee on the morning commute can be automatically bought and paid for before rolling up to the Dunkin’ window with spoken commands or prompts, a form of ambient, hands-free commerce.

As Lubell told Webster, “The big takeaway for 2022 is that it’s about connectivity — and how to maximize that connectivity to drive businesses forward to support customers, maximize revenue opportunities and plan in new areas where firms may not have had that opportunity before.”