Innovation in Global Payments: Pathways To Sustainable Growth

John Hunter

Global Product Executive for US Dollar Clearing Treasury Services J.P. Morgan

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A tipping point for payments: threat and opportunity

regulatory compliance

technology costs

cybersecurity threats

fintech disruption margin

pressure

fast

secure with minimal friction

easy

flexible

transparent

value for cost

efficient

Factors affecting the bottom line End-to-end Experience

Harnessing the network for smarter payment services

Brain Power Immediately access, aggregate and process vast data for actionable insights

Vital Signs Get a pulse on payments end-to-end and across their entire lifecycle

Consciousness Integrate payments, FX and liquidity

Connective Tissue Connect easily and in flexible ways

From payment networks to neural networks

Getting into the grey matter: how we are transforming our infrastructure

Building the foundation for a neural network

Building the foundation: one platform to serve many markets

Unique service

Unique service

Unique service

Shared services for scale efficiency

Core Engine

Building the foundation: a distributed ledger for super-charging network payments

Step One

Step three

Step Two

Book transfers Interbank flows Corporate flows

The multiplier effect across an expanding payments ecosystem

Building the foundation: partnering around the world to strengthen the network

Expanding the network into a global payments ecosystem

Harnessing the network for smarter payment services

Brain Power Immediately access, aggregate and process vast data for actionable insights

Vital Signs Get a pulse on payments end-to-end and across their entire lifecycle

Consciousness Integrate payments, FX and liquidity

Connective Tissue Connect easily and in flexible ways

From payment networks to neural networks

Processing Power Big Data Artificial Intelligence

Track & Trace SWIFT GPI

Automatic FX conversions

Just-in Time Funding Regional Priority

APIs Regional connectivity

Applying intelligence to the network for value-added services

Consciousness: solutions available today to integrate payments, FX and liquidity

Convert FX automatically • Combine payments and FX to pay beneficiaries in

their local currencies.

Fund your accounts just in time • Manage liquidity efficiently across currencies • Apply automatic FX conversion and sweep

Prioritize payments by region • Discern between future-dated payments • Stage payments by time and region • More tightly manage liquidity and payments

• Earn FX income on select cross-border payments

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USD Account Foreign Currency Account

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USD Account Foreign Currency Account

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FX Conversion FX Conversion

Connective tissue: Communicate simply, flexibly, and agilely Vital signs: Get a pulse on payments

Brain power: Quickly identify and thwart threats

• Requires a unified API infrastructure and strategy • Enhances client experience and serves needs

• Tracks and traces end-to-end • Automatically updates on message status

• Provides dual-channel authentication for wires via SWIFT

• Synthesizes vast data and applies business rules

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Pay or Reject?

Payment Instructions

Balance Reporting

Applying intelligence to the network for value-added services

Industry initiatives to modernize the payments system

Real-time Payments System • Provides payment immediacy and finality with instant

confirmation and integrated information flows. • Improves control over payments and cash position. • Enables straight-through processing automation to

payments reconciliation • Gives payment visibility to reduce risk and effort for you

and your payees

Irrevocable Payment in 10

Seconds

Instant Confirmation

Same-day ACH • Speeds up settlement for a class of transactions • Provides impetus for migrating business-to-business

check payments to ACH

Last minute bill pay Emergency payroll AP payments at theend of discount

availability

Most payments Trading partnerpayments

Others

Top Use Cases for Same-Day ACH

Source: 2016 AFP Electronic Payments Study BI Intelligence November 17, 2016

ISO20022 • Migrating U.S. payments infrastructure to ISO20022

messaging standards • Enables integration of payment and information flows • Provides a basis for value-added services to clients

“…the adoption of ISO globally is no longer a matter of ‘if’ but a matter of ‘when.’”

Richard Dzina, EVP, Federal Reserve Bank of New York Source: Fedfocus, March 2016

NACHA ISO 20022 Enhanced Mapping Guide (Nov 2016) Fedwire/CHIPS rollout planned for 2020

Migration continues: are you preparing?

57%

38%

24% 19% 17%

10%

The Tipping Point for Transforming the Power of the Network

Think differently about the payments ecosystem. What actions are you taking?

The payments landscape is changing across technology, regulations, and client expectations.

Brain Power

Vital Signs

Consciousness

Connective Tissue

fast secure with minimal friction

easy flexible transparent value for cost

efficient

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