JPMorgan: Embedded Payments Build New Business Models That Challenge Competitive Norms

In the darkest days of the pandemic, businesses scrambled to confront supply chain pressures and meet consumers on their mobile devices.

The changes felt temporary because commerce would return to normal when the health crisis passed. Turns out, as economies reopened, many of the changes wrought by the great digital shift became permanent.

For example, consumers have forged expectations of omnichannel experiences, especially when it comes to payments. Now businesses must be sure they are reacting quickly to shifting market conditions and payment preferences. And even in their relationships with trading partners, speedy and streamlined payments have proven to be a critical competitive advantage.

In an interview with Karen Webster, Eileen Dignen, global head of payments for Corporate Client Banking at J.P. Morgan, said that as enterprises partner with banks, J.P. Morgan among them, they can gain access to the innovative solutions and guidance that in turn help business models evolve, improving speed, accuracy and security in the meantime.

Digital Is a Way of Doing Business

Digital is no longer a strategy, Dignen told Webster — digital is a way of doing business. And many companies need to figure out what’s next.

Among the key innovations that can help firms connect with their own clients and customers in new ways: embedded payments.

But any new payments strategy mandates that companies be able to harness the relevant data to identify, and even anticipate, changing tastes.

“We always say that business innovation follows consumer expectations,” Dignen said.

And, broadly speaking, as individuals find an easy commerce or payment experience that can be done on their phones, they wonder why that same ease of use can’t translate to other areas of life — including as they interact with businesses, she said. Enterprises risk falling behind if they don’t more efficiently serve their clients.

“If you put the client at the center of things and develop innovation around them, well, it becomes a beautiful marriage,” Dignen said.

It’s the strategy that creates value and keeps the competition at bay, she said.

Companies across all verticals have had to “recognize” their clients and customers across different channels — and that’s no easy task, she explained.

“Processes take a while to develop, and you get into the habit of how you do business,” Dignen said.

These formed habits can be hard when a business model must shift quickly as it did for so many companies during the pandemic — from the restaurant industry, where in-person dining evolved to a carryout or delivery model, or from an inventory management perspective, when issues with supply chains materialized.

“So, all those who were thinking about an omnichannel eCommerce experience had to do that overnight to survive because the consumer expectation was that it would shift that quickly,” she said.

Having the right innovations in place, aided by data and technology, can foster a sense of loyalty — and even future-proof against changes in the competitive landscape that are impossible to even guesstimate now. They also open new avenues to monetize different payment flows.

AI’s Role — and the Benefits of Data

Against that backdrop, artificial intelligence (AI) has moved from the background to the foreground. Dignen noted that the advanced technology has been used by companies to improve some of their back-end processes. But now, with AI innovations evolving at a breakneck pace, companies need to understand what they can learn from the data that crosses their systems constantly.

AI can help companies understand their buyers’ behaviors and provide the insight needed to shift a business model to react to new developments — and even improve treasury operations while reducing manual processes.

With real-time payments and the introduction of FedNow, Dignen said, payments are moving more quickly, and individuals and enterprises alike will want to be able to benefit from that speed.

But as Dignen noted, “When there is disruption, it opens the window for a fraudster to get in.”

There’s the need to balance speed and security in a real-time world — and banks will prove to be trusted partners in helping companies operate in a secure environment, as biometrics gain wider embrace and passwords recede into the background.

The past three years have given rise to a way to look ahead, Dignen said.

“There’s been a positive environment for many of these businesses that have moved to a more efficient model,” she said, “… and what we learned from the pandemic was not to be afraid of change.”

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