Name: JP Morgan at Sibos 2023 – Managing liquidity and risk in today’s economic climate
Uploaded: 2023-10-03T15:01:14.927Z
Duration: 478.43
Description: At the Sibos 2023 conference in Toronto, FinTech Futures sat down with Lori Schwartz, Global Head of Liquidity and Account Solutions at JP Morgan, to discuss the key challenges for businesses when it comes to liquidity management amid tough macroeconomic conditions and how firms should be looking to manage their risk through this period.

09-Lori Schwartz.mp4

09-Lori Schwartz.vtt

ENGLISH 

{{00:00:03}}
This is FinTech Futures at Sibos and
I'm joined by Lori Schwartz of J.

{{00:00:09}}
P.

{{00:00:09}}
Morgan.

{{00:00:10}}
Laurie, thank you so much for taking
the time out to speak with us.

{{00:00:12}}
Just to get started, why don't
you give us a quick introduction

{{00:00:14}}
to yourself and your role at J.

{{00:00:15}}
P.

{{00:00:15}}
Morgan?

{{00:00:16}}
Brilliant, thanks.

{{00:00:16}}
So firstly Thank you
so much for having me.

{{00:00:18}}
I'm Lori Schwartz.

{{00:00:19}}
I have the privilege of running the
Liquidity and Account Solutions business

{{00:00:22}}
within the Payments Organization at J.

{{00:00:24}}
P.

{{00:00:24}}
Morgan.

{{00:00:25}}
To start with given the current economic
landscape that we're in at the moment,

{{00:00:28}}
what are some of the key challenges
for businesses when it comes to their

{{00:00:30}}
liquidity management at the moment?

{{00:00:32}}
Yeah it is definitely...

{{00:00:35}}
Quite a time, and I think above all
else, what every corporate treasurer

{{00:00:38}}
across the world is thinking about
is the cost of inefficient working

{{00:00:42}}
capital is at an all time high, right?

{{00:00:44}}
High interest rates, high cost of
capital volatility, and so in general

{{00:00:49}}
I think there is just a huge focus
on trying to create visibility,

{{00:00:53}}
control, and optimization to really
make that working capital efficiency.

{{00:00:57}}
Excellent, excellent.

{{00:00:58}}
And what do you think businesses
have learned then from this economic

{{00:01:00}}
downturn at the moment when they're
looking at their long term goals?

{{00:01:02}}
Yeah, so Overall, I think it's about.

{{00:01:07}}
This realization that there's never a bad
time for good liquidity management, right?

{{00:01:11}}
So what does that mean is, and especially
in the payments business, where every

{{00:01:15}}
single day it's about moving money, right?

{{00:01:18}}
And as I like to say, every payment
begins and ends with liquidity.

{{00:01:21}}
So ensuring that you have liquidity
cash in the right place, in the right

{{00:01:25}}
currency, at the right time, is paramount.

{{00:01:27}}
And I think a lot of treasurers,
especially as we saw different, Impacts

{{00:01:32}}
or volatilities introduced over the
last couple of years really found

{{00:01:36}}
themselves asking the question like,
where is my cash, how much do I have?

{{00:01:39}}
And so visibility became paramount
and there was an absolute rush to cash

{{00:01:44}}
over the last couple of years, so the
preparedness of treasurers, treasury

{{00:01:48}}
organisations to be able to best
utilise their working capital in any

{{00:01:53}}
environment has been an absolute priority.

{{00:01:56}}
And what kind of key advice then would
you give to treasurers when it comes to

{{00:01:59}}
their liquidity access at the moment?

{{00:02:01}}
I think a lot of this starts
with understand the nature by

{{00:02:04}}
which your company is using cash.

{{00:02:07}}
So this whole push and pull of
centralization, decentralization

{{00:02:12}}
independence and autonomy
versus the benefit you get of

{{00:02:15}}
bringing things together within
a centralized treasury function.

{{00:02:19}}
There is a huge amount of
benefit to be gained by that

{{00:02:22}}
consolidation and centralization.

{{00:02:24}}
So when we start a journey with any kind
of corporate treasurer, we like to think

{{00:02:29}}
about is how do we start to rationalize?

{{00:02:31}}
And that word comes up a lot
because in the payments business.

{{00:02:35}}
It's short term cash, it's making
payments around the world, multiple

{{00:02:39}}
currencies, countries, time zones.

{{00:02:41}}
And so often what happens is there is just
a proliferation of account structures.

{{00:02:46}}
And so the sum of all parts, the sum
of the parts is always larger than

{{00:02:49}}
the total that's actually needed.

{{00:02:51}}
So if you start with an account
rationalization structure to

{{00:02:54}}
good liquidity management.

{{00:02:59}}
Excellent.

{{00:02:59}}
And how do these kind of skill sets
and help treasurers add value to

{{00:03:01}}
the business units they work with?

{{00:03:03}}
It's really interesting because
I think treasury overall is on

{{00:03:06}}
quite a fundamental change, right?

{{00:03:09}}
So treasurers of the past have really
been focused on management of the

{{00:03:14}}
company's working capital, paying
suppliers, paying people, accepting cash

{{00:03:22}}
from sales and otherwise, which is all
super important and remains as such,

{{00:03:26}}
and there's a huge amount of solutions
in the market that can help treasurers

{{00:03:29}}
be efficient in that regard, but what's
also happening is A lot of companies

{{00:03:34}}
themselves, and it's the magnitude by
which e commerce and marketplaces have

{{00:03:42}}
hit, is that business models themselves
are actually getting involved in cash.

{{00:03:46}}
And that's an entirely different
reality for a corporate treasurer.

{{00:03:50}}
So holding and handling what we call a...

{{00:03:53}}
third party monies is an enormously
new part of any treasury.

{{00:03:57}}
The connectivity back to adding value
to the business as well, if your

{{00:04:02}}
treasury is not prepared to manage
the flows and the money through like

{{00:04:07}}
these marketplaces, actually the
business enablement will be stopped.

{{00:04:11}}
And so what we found is of top
importance now is making sure that

{{00:04:15}}
those treasurers are actually engaged
and involved in those conversations.

{{00:04:19}}
as they're happening, because they're
key enablers to business growth.

{{00:04:22}}
Excellent, And what kind of technologies
and solutions in particular do

{{00:04:25}}
you think companies can be looking
to tap into to help with this?

{{00:04:28}}
So on, on the account side and
with rationalization, I think we've

{{00:04:32}}
seen a huge boom of virtualization.

{{00:04:34}}
So what exactly does that mean is the
old approach, if I can call it that,

{{00:04:38}}
has been I set up accounts for purposes.

{{00:04:42}}
I retained independence
and integrity of data.

{{00:04:45}}
By using accounts, and so hence
that proliferation of accounts

{{00:04:49}}
were created, which became harder
and more difficult to manage.

{{00:04:53}}
Technology has really become a huge
boost to account rationalization.

{{00:04:58}}
Why?

{{00:04:58}}
Because by embedding a virtual account
structure within a physical single

{{00:05:03}}
liquidity position, you can actually
retain all the information that is

{{00:05:07}}
needed, but you get the benefit of
that centralized liquidity position.

{{00:05:12}}
That's just one.

{{00:05:13}}
On the other side I think The advancement
of payments in themselves, so like all

{{00:05:19}}
the real time payment schemes, instant
payments that are coming around real

{{00:05:23}}
time payment means real time liquidity.

{{00:05:24}}
And so actually connecting the liquidity
solutions, which absolutely is happening

{{00:05:29}}
in the market, to be able to move as
fast and in anticipation of the payment.

{{00:05:33}}
given those payments are now going 24 by
7 by 365, is just exceptionally important.

{{00:05:39}}
Excellent.

{{00:05:39}}
And what has JP Morgan been doing in
particular as well to help with this?

{{00:05:43}}
Our virtual solutions
product set has been built.

{{00:05:47}}
It's our market leading VAMS solution.

{{00:05:49}}
We've also been adapting it to third
party monies, which is really where I

{{00:05:52}}
think these solutions are going to be
a catalyst of growth for the companies.

{{00:05:57}}
Also, we've continued to focus on what has
been The age old challenge for corporate

{{00:06:03}}
treasurer, short term cash forecasting.

{{00:06:05}}
So our cash flow intelligence solution
is really trying to pinpoint how do you

{{00:06:10}}
help corporate treasurers understand their
cash positions, aggregate a huge amount

{{00:06:14}}
of information and receipts and payments
that they're not always necessarily

{{00:06:18}}
in control of to try to optimize those
cash positions in the short term.

{{00:06:23}}
Why?

{{00:06:23}}
Because freeing up working capital is
probably the biggest top line to bottom

{{00:06:27}}
line improvement that a corporate
treasurer can do on a daily basis.

{{00:06:41}}
Excellent.

{{00:06:41}}
I by nature, I'm cautiously optimistic
in life and in, in the market as well.

{{00:06:47}}
I think there's been a huge
show of resilience within the U.

{{00:06:50}}
S.

{{00:06:50}}
economy, even at these higher
interest rates and elevated inflation.

{{00:06:54}}
You've got unemployment I think
generally lower than most people

{{00:06:59}}
would have expected at this point.

{{00:07:00}}
I think we haven't seen the end of
the interest rate cycle, so the risks

{{00:07:04}}
that persist out there will continue
and, every corporate treasurer.

{{00:07:09}}
Really needs to be asking themselves
that exact same question, is what is

{{00:07:11}}
the risk that is coming into my business
and how do I best prepare for it?

{{00:07:15}}
On a positive, as I said before, I
think there's never a bad time for

{{00:07:18}}
liquidity management and what we
absolutely found through the response

{{00:07:23}}
in the global pandemic was Corporate
treasurers and companies that had

{{00:07:26}}
invested in the virtual and physical and
notional solutions really to aggregate

{{00:07:31}}
and make best use of their own cash.

{{00:07:34}}
They had a better starting point
and they were well equipped to

{{00:07:37}}
handle shocks to the system.

{{00:07:40}}
Cautiously optimistic always, but I do
think that the techniques are out there

{{00:07:44}}
to help and we're always here to help.

{{00:07:47}}
Excellent.

{{00:07:47}}
Lori, thank you

{{00:07:48}}
so much for taking the time
out to speak with us again.

{{00:07:49}}
It's been a pleasure.

{{00:07:50}}
Great.

{{00:07:51}}
Thank you so much.

{{00:07:51}}
Thank you.

This is FinTech Futures at Sibos and
I'm joined by Lori Schwartz of J.

Laurie, thank you so much for taking
the time out to speak with us.

Just to get started, why don't
you give us a quick introduction

So firstly Thank you
so much for having me.

I have the privilege of running the
Liquidity and Account Solutions business

To start with given the current economic
landscape that we're in at the moment,

what are some of the key challenges
for businesses when it comes to their

Quite a time, and I think above all
else, what every corporate treasurer

across the world is thinking about
is the cost of inefficient working

High interest rates, high cost of
capital volatility, and so in general

I think there is just a huge focus
on trying to create visibility,

control, and optimization to really
make that working capital efficiency.

And what do you think businesses
have learned then from this economic

downturn at the moment when they're
looking at their long term goals?

This realization that there's never a bad
time for good liquidity management, right?

So what does that mean is, and especially
in the payments business, where every

single day it's about moving money, right?

And as I like to say, every payment
begins and ends with liquidity.

So ensuring that you have liquidity
cash in the right place, in the right

currency, at the right time, is paramount.

And I think a lot of treasurers,
especially as we saw different, Impacts

or volatilities introduced over the
last couple of years really found

themselves asking the question like,
where is my cash, how much do I have?

And so visibility became paramount
and there was an absolute rush to cash

over the last couple of years, so the
preparedness of treasurers, treasury

organisations to be able to best
utilise their working capital in any

environment has been an absolute priority.

And what kind of key advice then would
you give to treasurers when it comes to

I think a lot of this starts
with understand the nature by

So this whole push and pull of
centralization, decentralization

independence and autonomy
versus the benefit you get of

bringing things together within
a centralized treasury function.

There is a huge amount of
benefit to be gained by that

So when we start a journey with any kind
of corporate treasurer, we like to think

And that word comes up a lot
because in the payments business.

It's short term cash, it's making
payments around the world, multiple

And so often what happens is there is just
a proliferation of account structures.

And so the sum of all parts, the sum
of the parts is always larger than

So if you start with an account
rationalization structure to

And how do these kind of skill sets
and help treasurers add value to

It's really interesting because
I think treasury overall is on

So treasurers of the past have really
been focused on management of the

company's working capital, paying
suppliers, paying people, accepting cash

from sales and otherwise, which is all
super important and remains as such,

and there's a huge amount of solutions
in the market that can help treasurers

be efficient in that regard, but what's
also happening is A lot of companies

themselves, and it's the magnitude by
which e commerce and marketplaces have

hit, is that business models themselves
are actually getting involved in cash.

And that's an entirely different
reality for a corporate treasurer.

So holding and handling what we call a...

third party monies is an enormously
new part of any treasury.

The connectivity back to adding value
to the business as well, if your

treasury is not prepared to manage
the flows and the money through like

these marketplaces, actually the
business enablement will be stopped.

And so what we found is of top
importance now is making sure that

those treasurers are actually engaged
and involved in those conversations.

as they're happening, because they're
key enablers to business growth.

Excellent, And what kind of technologies
and solutions in particular do

you think companies can be looking
to tap into to help with this?

So on, on the account side and
with rationalization, I think we've

So what exactly does that mean is the
old approach, if I can call it that,

I retained independence
and integrity of data.

By using accounts, and so hence
that proliferation of accounts

were created, which became harder
and more difficult to manage.

Technology has really become a huge
boost to account rationalization.

Because by embedding a virtual account
structure within a physical single

liquidity position, you can actually
retain all the information that is

needed, but you get the benefit of
that centralized liquidity position.

On the other side I think The advancement
of payments in themselves, so like all

the real time payment schemes, instant
payments that are coming around real

FinTech Futures

Expert Insight

At the Sibos 2023 conference in Toronto, FinTech Futures sat down with Lori Schwartz, Global Head of Liquidity and Account Solutions at JP Morgan, to discuss the key challenges for businesses when it comes to liquidity management amid tough macroeconomic conditions and how firms should be looking to manage their risk through this period.


