J.P. Morgan yesterday highlighted its expanding local currency cross-border payments capabilities and trade finance activities in the region as part of a $1 billion global investment in its transaction banking business. The US bank made the comments at Sibos, an annual transaction banking conference organised by The Society for Worldwide Interbank Financial Telecommunication (Swift), that is being held in Hong Kong this week.
Simon Jones, Asia-Pacific executive of J.P. Morgan Treasury Services, said the bank is especially focusing on expanding its capabilities in Chinese renminbi, Indian rupee, Japanese yen and Korean won to meet client demand. These enhancements to current product offerings benefit both the bank's cash management and trade finance businesses.
"The trend we see in the region is that regional banks are coming to us not just for euro and US dollar services, but for help with Asian currencies," said Jones. He gave the example of Indian financial institutions expanding to Hong Kong to serve China-India trade flows that are engaging J.P. Morgan for trade finance and cash settlement solutions. He declined to name specific Indian banks.
While he would not specify the amount of investment directed at Asia, Jones explained that much is being invested in global platforms that allow the bank to "better serve Asia".
Earlier this month J.P. Morgan added Korean language capabilities to its web portal, and also improved its won multi-bank sweeping capabilities. In August it expanded its US Dollar Clearing Asia Direct solution to Japan.
The US bank is focusing the investment on product enhancements, not new solutions. When prompted, Jones said J.P. Morgan's treasury services business in the region will focus on "what we've been investing in", referring to expanded geographic coverage and enhanced on-the-ground capabilities.
He cited the bank's trade processing partnership with Singapore's OCBC bank as an example of a solution J.P. Morgan is expanding among Asian financial institution clients. Announced in 2007, the white-labelling agreement involves J.P. Morgan handling processing of OCBC's import and export transactions at all of the Singaporean bank's overseas branches.
In terms of geographic expansion, Jones emphasised a continued focus on China and India. Already, J.P. Morgan has opened offices in Chengdu and Guangzhou in China this year.
Some of the latest product developments in treasury are in mobile payments and authorisation. Last year, Deutsche Bank and Standard Chartered Bank both launched solutions allowing on-the-go treasurers to authorise payments from their mobile devices. Citi is set to announce a new mobile platform this week. However, J.P. Morgan has yet to announce solutions in this emerging market.
"Mobile payments are today attractive to remittance in the retail space," said Jones. "Adoption among wholesale clients will take time to become prevalent." J.P. Morgan is watching mobile solutions closely but currently plans to wait until corporate clients express a strong interest before launching a mobile product, he added.
"It's a little like the adoption of internet banking in the wholesale space," he explained. "It took time for internet banking to become common among corporates after the strong adoption in retail banking."
Looking ahead, J.P. Morgan plans "ambitious" growth in Asia. Jones said this will be across cash management, trade finance and securities services but he expects to see current double-digit revenue growth become "even stronger double digit" growth starting in the fourth quarter of the year.
"J.P. Morgan plans to more than double the treasury and securities services business in Asia in the next four to five years," said Jones. But so does every major bank, and some not so major ones. It remains to be seen whether they will all succeed.
