Upon reading the headline in asset servicing times, one’s initial reaction would be that another cross border network or platform has been launched, similar to the many announcements that have already been made in the past 6-12 months (including J.P. Morgan themselves with IIN and the JP Coin). In this case however, upon reading further, we find what seems to be a purpose-built solution for the particular quirks of the China market, which they call the E-Customs Payment Solution.
‘J.P. Morgan has launched its E-Customs Payment Solution, making it the first foreign bank in China to offer a solution that fully digitizes and automates cross-border payments of goods…Importers in China are required to provide supporting documents to their banks prior to making payments to overseas suppliers….With the E-Customs Payment Solution, J.P. Morgan’s clients in China will only be required to send the payment instructions with linked customs declaration number….Using application programming interface technology, J.P. Morgan’s E-Customs Payment Solution will then retrieve the relevant customs declaration status from the local authorities via the Shanghai international trade single window in real time and process the payments automatically.’
In effect J.P. Morgan clients can use their digital banking platform, called ACCESS, to enable payments to foreign suppliers without then having to submit cumbersome paperwork, which of course causes delays and potential errors. Using APIs, the E-Customs solution ties the payment request to retrieving digital documents found at the official trade site. There is no mention in the article about the actual payment’s clearing and settlement, which we assume is the one of choice using existing rails. We would also expect that the solution can be accessed via mobile, but it does not specify. So this is simply another example of how latest gen tech is being utilized in corporate banking to extract paper and cost from financial processes, while increasing transaction visibility. We highlight this as one of our themes in 2019, and detailed why in a recent report titled Fintech in Corporate Banking: Digitize or Miss the Boat. More good stuff happening across the landscape.
‘Rani Gu, head of treasury services, China and head of treasury services product, Greater China, wholesale payments at J.P. Morgan, said: “We are pleased to roll out an innovative solution that enables the full digitisation of cross-border payments, which we view as a milestone and one that addresses our clients’ specific needs amid a rapidly-evolving treasury landscape.”… “J.P. Morgan has been investing heavily in this space to better serve our clients and we continue to invest and set a new benchmark for innovation in the banking industry”.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group