JP Morgan, which last month announced it was making a strategic investment in Mumbai-based fintech Global PayEx, aims to expand its cash management in key regional markets such as China and India, says a senior executive.
The US bank’s first investment in an Asian financial technology firm is a key plank in its strategy to boost cash management services in Asia’s fast-growing markets, according to Kalpana Morparia, JPMorgan’s chairman for South and Southeast Asia.
In an interview with Bloomberg, she said that the Global PayEx purchase reflects the bank’s ambitions in transaction banking, in which technology is the key differentiator.
JP Morgan may use Global PayEx’s electronic invoicing in other emerging markets and is open to the idea of further fintech investments to bolster its cash management services for corporate clients, Morparia said.
An $11.5 billion budget
The US bank has allocated US$11.5 billion for technology investments in 2019 with machine learning, artificial intelligence (AI) and blockchain identified as priorities, according to its annual report.
JP Morgan’s return on equity from cash management -- the business of helping multinational companies manage their liquidity and a key component of transaction banking -- was 20% last year, exceeding the 15% return from the corporate and investment bank.
“The biggest play in Asia is really China, followed by India, in terms of the size of the economy and the number of clients that we wish to serve there,” Morparia said. “So we are constantly looking for anything that we can do for them to make it far easier for them to operate."
The Global PayEx service is especially attractive in a market such as India, where corporate clients often struggle with “much documentation, heavy invoicing and then the associated problems with any reconciliation,” she said. “This can be used in any other market with the same problems.”
JPMorgan is also reviewing India’s growing loan securitisation market, which has picked up strongly as several banks and shadow lenders have sought to offload their loan portfolios during a squeeze in the money markets.
“I think the securitisation market will grow well in India,” Morparia said. “The regulatory system is fairly good and is in place. Now you will start seeing volumes. We want to move in there.”
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