JPMorgan Payments Sees Dawn of ‘Treasurer as Influencer’ Era as Focus Shifts to Profits

With 2023 off to a running start, treasury is calling the shots differently, with a refined focus forged in the crucible of 2022.

Julie Lubell, global head of Trends and Advisory at J.P. Morgan Payments, discussed with Karen Webster the new roadmap for investing and corporate strategies that take the triumphs and failures of the past three years and create something new.

Business is shifting into what she called a “deliberate mode.”

“We look at it as a more deliberate mode because if you remember, just a short time ago, we were pretty much in that growth mode in early 2022, 2021,” Lubell said. “We had come out of the pandemic headed into this massive growth. Then halfway through last year, it took a turn.”

That turn was runaway inflation, the war in Ukraine, continued supply chain problems, high interest rates on suddenly scarce investment capital, and the need for new solutions.

“It’s a very different economic climate than what we’ve seen before,” she said. “Whereas everyone was kind of like, ‘Where can I invest,’ now they’re thinking about, ‘OK, money’s a little bit more expensive now. Let me be much more strategic and focused on where I do invest.’”

With companies reacting to market shifts and reprioritizing, Lubell’s team is focusing on five trends that are already defining the post-2022 environment. They include protect the core; treasury as an influencer; innovation through ecosystems; environment, social and governance (ESG); and certain uncertainty.

Foremost of the five is “protect the core,” as treasurers face new risks introduced by the new macroeconomic environment.

“Treasurers are looking at the risks that do exist and making sure that they’re having those policies in place, that they’re working against them, that they’ve been stress tested, they’re scenario tested, that they’re working with their auditors and their controllership teams to ensure that there’s the right level of visibility,” Lubell said.

This is about more than optimizing working capital and strengthening balance sheets, but also indicates more attention to risk and having protocols in place to manage for the unexpected.

And with payments growing in strategic importance to companies, the remit and skills required from treasurers is growing, entering the era of the treasurer as an influencer trend.

Lubell said the treasurer as an influencer needs to “partner with the product team, with the supplier team, with the procurement team, with marketing, with all of the different business areas … to identify how payments can help drive new revenues and power new business models as well as identify the new payment flow data and tech that is required to power these new capabilities.”

Tools of the Trade

Are treasurers ready for this expansive and influential new role?

“There will be a bit of upskilling,” Lubell said. “I believe that many of the treasurers have been seeing this or it’s been foreshadowed. So, they’ve already been working with their partners and bank providers like J.P. Morgan to help guide them and get those tools in place.”

That runs the gamut from real-time cash flow forecasting to helping manage a faster flow of information and funds, to data analytics. These are crucial in quickly identifying patterns from fraud to strategic decisions about how money should flow, among other responsibilities.

“Even on contextual commerce at the front-end user experience, all of that means the treasurer now is going to be much more reliant on some of these very tech-savvy tools,” she said. “I would see much more happening in the area of cash flow forecasting” and crossing over into artificial intelligence (AI) and machine learning analytics, tokenization and cybersecurity.

In addition to those tools, treasurers will be required to use “capabilities or functionalities to create solutions to move into the next kind of arena of payments,” she said. “Those would be embedded banking, marketplaces, platforms and things like that — those less about tools and more about solution function capabilities that I see them getting much more involved with.”

Ecosystem, ESG and Certain Uncertainty

Within the innovation through ecosystems trend, Lubell said a slowdown in the economy can’t (and won’t) stop innovation, and that turns on a new definition.

“When we talk about the ecosystems, it’s looking more at that client-centric kind of an ecosystem,” she said.

Advances in cloud technology, application programming interfaces (APIs) and AI have enabled products and services to be packaged in a different way. This new ecosystem model is blurring the lines between industries and causing businesses to rethink the way they operate.

“Companies who had a mindset of, ‘This is what my business model is, this is what I do, this is my marketplace or my eCommerce model,’ are rethinking how they could interject their operations or their offerings into other, possibly complementary areas, she said.

As this activity ramps up, businesses would be wise to work with their bank partners. With the vantage point of working across industries, banks can offer holistic advice on strategy and develop bespoke payment rails to equip businesses with tools that are market differentiators.

As the individual becomes the center of the ecosystem, this could take the form of biomedical devices sending information to your doctor or pharmacist who fills a prescription and confirms payment.

“None of that is me going anywhere,” she said. “I didn’t go to the doctor, everybody came to me, and I’ve now made all these purchases. That’s the reality of where we’re headed.”

It might be hard to imagine how treasury influences ESG, but as the treasurer gains influence across other lines of business, payments can enable ESG goals.

“There’s a lot more focus now on greenwashing,” she said. “How do you reconcile that with the rating systems which might not be able to identify those? My take is that we’re going to see a lot of organizations looking at what are the tools that they could leverage within their organization, and which ones fit and meet their brand identity.”

Finally, on the certain uncertainty trend, this takes the macro environment, combined with the changes in the payments landscape, and looks at how the treasurer can build resilience while focusing on the right innovation. This covers a lot of ground from cash visibility across high-risk to low-risk regions, in-house banking to centralize and attain that control, risk management, foreign exchange (FX) assessment, interest rates, investments and policies to police it all.

“Companies are going to need to do a lot more upfront analysis and research because they’re not going to have the funds to play around with as they did before, which means that data is going to become paramount,” she said. “So, welcome to the year of AI, machine learning, cash flow forecasting and all of that.”