Published: March 29, 2022
In February 2021, J.P. Morgan’s Onyx arm announced that it had executed a blockchain payment in space. The transaction took place between satellites orbiting Earth, in a first of its kind test of the Internet of Things (IoT) payments technology.
While the test was in some ways just for fun, there are plans for both commercial and corporate use cases as space exploration continues. This willingness to think outside the limits of traditional treasury is reflected in the five TMI Corporate Recognition Awards won by J.P. Morgan clients in 2021.
Best Supply Chain Solution
Alibaba
The first Award win, Best Supply Chain Solution, went to e-commerce giant Alibaba.com for its work to mitigate the financial and supply chain challenges being faced by its 150,000 suppliers due to the Covid-19 pandemic.
With suppliers in around 200 locations, lack of visibility around cross-border payments was an issue as suppliers could not tell when monies from Alibaba would hit their accounts, impacting the ability of suppliers to forecast liquidity and working capital. And once funds did arrive, disputes over FX and bank fees due to the lack of clarity on deductions were not uncommon.
To ease these supplier pain points, Alibaba.com turned to banking provider J.P. Morgan for help, and successfully implemented the SWIFT gpi for Corporates (g4C) Inbound Tracking service. The solution efficiently tracks the incoming payments made to the 150,000 suppliers on Alibaba.com’s global trading platform. This enables them to detect and monitor inbound transactions in real time before the proceeds are credited to their bank accounts.
The Inbound Tracking tool traces the key steps along the payment path including initiation, delivery and crediting to the beneficiary bank. It also flags if a payment has been held in intermediary processing for more than six hours and if it has been rejected. These status updates are relayed from SWIFT to J.P. Morgan in real time leveraging API technology. In turn, the bank notifies Alibaba.com through a second set of APIs. Alibaba.com then extends the same information to its suppliers – helping them to improve the efficiency of working capital and ultimately adding to the financial wellbeing of their business.
Best Cash Pooling Solution
PayPal
When payments expert PayPal acquired Zettle, the leading small business commerce platform in Europe and Latin America, it was clear that there would be significant integration work ahead – especially from a treasury perspective.
As PayPal’s house bank, J.P. Morgan was asked to help with transferring control of cash balances to PayPal, easing any funding requirements and seamlessly integrating Zettle within the PayPal liquidity structure, both today and with a future location in mind: Luxembourg.
The solution came in the form of a two-phased state-of-the-art notional pooling solution. In Phase One, the existing header account and multicurrency notional pool for PayPal remained in London, while a new Luxembourg-based multi-entity, multicurrency notional pool was established to incorporate the newly acquired Zettle entities, as well as the PayPal treasury centre.
To minimise disruption multi-bank sweeps were put in place with Zettle’s existing banks. A cross-border automated ‘drain’ sweep was also used to extract the net balance across both London and Luxembourg pools. This enabled the seamless concentration of cash held within the two pools across the different locations into a single bank account.
In Phase Two, the two notional pooling structures were combined as the London structure migrated to Luxembourg, integrating the existing London-based accounts into the new multi-entity notional pooling structure in Luxembourg. The seamless nature of the project, and the innovative sweep functionalities, make this project worthy of the Best Cash Pooling Solution Award 2021.
Best API Deployment
Unilever
Consumer goods conglomerate Unilever was looking for ways to create greater synergies in its business and the treasury function was keen to help drive any strategic shifts. As such, treasury decided to embark on a project to improve its visibility over cash and enable the department to become more proactive, equipped with real-time information at the touch of a button.
Traditionally, Unilever had to rely on previous-day statements to ascertain its financial positions. But in a fast-paced multinational, with hundreds of bank accounts across subsidiaries, information can quickly become obsolete. Unilever decided to explore J.P. Morgan’s Insight API solution to move towards a real-time banking environment.
The Insight API provides on-demand banking data and services access on a client’s chosen platform, providing agility and adaptability to meet evolving strategic requirements. Installed via Microsoft Excel, J.P. Morgan’s solution took just 10 days to deploy and now, Unilever has access to constant, real-time information across each and every business bank account.
The benefits include accurate cash management decisions, reduced risk when forecasting, and opportunities to make more effective, timely FX trades. As an early adopter of APIs, with great success, Unilever is the deserving winner of the Best API Deployment Award 2021.
Best Treasury Transformation Project
Highly Commended
Ant Group
A leading global online payments provider, Ant Group, was experiencing significant worldwide growth – and the volume of payments through its channels was increasing. This highlighted inefficiencies and limitations in its treasury functions, including decentralised FX and liquidity management, costly overdrafts, and fund efficiency constraints. The latter occurred as Ant operated its global treasury funds solely from Singapore, resulting in value-dating that could only happen in Asia Pacific (APAC) hours.
These challenges had knock-on impacts on Ant Group’s customers including longer payment cycles, costly transaction fees, and limited choice of settlement currencies. Ant therefore embarked on a treasury transformation journey. As part of this project, Ant Group set up Alipay Global Markets Singapore (AGM) to centralise FX services, liquidity management, and intra-group settlements.
In collaboration with J.P. Morgan, Ant Group then built a global FX and liquidity centre (FLC) structure for AGM by connecting five global treasury hubs in Singapore, Hong Kong, Luxemburg, New York, and London, covering more than 40 currencies and over 100 currency pairs across 60 entities. The FLC set-up includes global USD cash concentration, multicurrency notional pooling, and local multi-bank sweeping structures. It also enables access to local clearing systems to facilitate cross-border collections and allow local payments, resulting in quicker movement of funds and lower clearing costs.
In addition, a customised FX mechanism facilitates the foreign exchange of 40 currencies and over 100 currency pairs to be centrally executed and settled in the fastest and most cost-effective manner; and value dates set at the earliest possible timings.
The solution also leverages virtual accounts and API technology, alongside Ant Group’s AI , data science and ML technologies for liquidity forecasting, making this worthy of a Highly Commended accolade in the Best Treasury Transformation category.
Best Sustainable SCF Solution
Highly Commended
Bridgestone
Bridgestone considers sustainability to be part of its DNA. Sustainable supply chain finance (SCF) was therefore a natural fit for Bridgestone. But the company wanted to leverage external sustainability ratings, from partner EcoVadis, to make the solution more robust and transparent.
After detailed scrutiny of RFPs, Bridgestone chose the strategic alliance of J.P. Morgan and Taulia for the sustainable SCF programme, which uses a pricing matrix created by the bank, linked to EcoVadis data. The matrix works in both directions, providing more favourable pricing for suppliers that are verified as hitting certain sustainability goals.
Bridgestone went live with the sustainable SCF programme in December 2020 – and made significant progress with it throughout 2021. Once onboarded, suppliers can use Taulia’s platform to have full visibility of their invoices and the status of individual invoices in Bridgestone’s process. They then simply click if they want to receive early payment.
As well as providing pricing incentives, the programme also encourages suppliers to improve their own EcoVadis ratings. Moreover, for Bridgestone itself, there is the working capital benefit as it generates funds to spend on sustainable projects. J.P. Morgan also gets a win, in terms of the new business that the programme brings.
Last but not least, there are benefits for future generations and for the planet – making this project a clear Highly Commended in the Treasury4Good Awards 2021, Best Sustainable SCF Solution.
J.P. Morgan
Our vision in J.P. Morgan Payments, is to transform the future of payments as the industry’s most trusted innovator and empower your business to thrive. We believe seamless and secure payment solutions can help your business grow, diversify and thrive – enabling you to pay anyone, by any method or channel, from anywhere, at any time.
For over 30 years, Treasury Management International (TMI) has been dedicated to promoting best practices and innovations in treasury management. The TMI Awards for Innovation & Excellence play a key role in this, formally recognising the corporate practitioners, banks, vendors and consultants who are defining new frontiers globally.
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