Explore the cutting-edge universe of financial transactions with Max Neukirchen, JP Morgan's visionary Head of Payments and Commerce Solutions. Venture behind the scenes of a business unit that has a massive global footprint, with a workforce spanning 120 countries dedicated to servicing a diverse clientele, from neighborhood shops to large corporate entities.
In our discussion, Max demystifies the competitive advantages of JP Morgan Payments over both traditional banks and nimble fintech competitors, and he provides a panoramic view of services that encompass everything from treasury management to merchant services to trade finance.
His personal narrative, stretching from his roots in Germany to steering a major division of a financial titan, provides a rare glimpse into the inner workings of JP Morgan and the diverse interests that propel a leader in the payments space. Further enriching the dialogue, Max shares personal anecdotes highlighting how his travels and extracurricular passions have enhanced his professional perspective.
Explore the cutting-edge universe of financial transactions with Max Neukirchen, JP Morgan's visionary Head of Payments and Commerce Solutions. Venture behind the scenes of a business unit that has a massive global footprint, with a workforce spanning 120 countries dedicated to servicing a diverse clientele, from neighborhood shops to large corporate entities.
In our discussion, Max demystifies the competitive advantages of JP Morgan Payments over both traditional banks and nimble fintech competitors, and he provides a panoramic view of services that encompass everything from treasury management to merchant services to trade finance.
His personal narrative, stretching from his roots in Germany to steering a major division of a financial titan, provides a rare glimpse into the inner workings of JP Morgan and the diverse interests that propel a leader in the payments space. Further enriching the dialogue, Max shares personal anecdotes highlighting how his travels and extracurricular passions have enhanced his professional perspective.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Speaker 2:We have a great team here, very diverse, and what I love here smart people, dedicated people, people who work hard, who row in the same direction, but ultimately also good individuals. That is, for me, always the most important piece because, as I said earlier, we spend so much time at work. It better be with people you enjoy hanging out with and you enjoy being on one team, and JP Morgan has a very hard-charging but collaborative culture.
Speaker 3:That was Max Newkirchen, head of payments and commerce solutions at JP Morgan, and he is my special guest on this episode, episode 293 of the Leaders in Payments podcast, and I'm your host, greg Myers. Jp Morgan Payments covers a full range of payments needs, from treasury services to merchant acquiring to trade finance. The business unit includes 30,000 employees across 120 countries. Max and I talked a lot about payments, including how JP Morgan payments services small to large clients, what makes them unique in the marketplace and who they compete against. We also talked about innovation, as well as how Max sees the future payments in the next few years. We also go on to talk about culture and leadership and some of Max's passions, including skiing and tennis. We've got a great episode ahead, so let's get started. Hi Max, thank you for being here and welcome to the Leaders in Payments podcast.
Speaker 2:Thanks for having me. I really look forward to this.
Speaker 3:Absolutely. So let's dive right in, If you don't mind. Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, and then we'll circle back to your professional journey in a few minutes.
Speaker 2:Yes, as you might guess from my name and accent, I was born and raised in Germany and lived there basically for the first one and a half decades of my life. I went to college in the UK and in Cambridge studying physics and then I graduated, joined the consulting firm McKinsey and worked there for a number of years before taking another academic break to do a PhD in Sydney, australia, and my thesis was on managing house price risks. That is an important asset for many individuals and I was thinking about what can they do to hedge the risk in that asset better. I went after that back to McKinsey for a few years, first in Europe, and then moved to the US about 24 years ago and came to JP Morgan 11 years ago as head of strategy for the company. After doing that for a few years, I came into payments to run first our merchant services business and then what we call today payments and commerce solutions. That we will talk more about, I think, as part of this podcast.
Speaker 3:Yeah, great Thanks for that background. Let's go ahead and discuss JP Morgan payments. Tell us what JP Morgan payments does and sort of the relationship with the rest of the organization.
Speaker 2:JP Morgan payments is basically a payments business that serves a wide range of clients, from a bakery around the corner all the way to the largest companies and financial institutions on the planet, and it is a true industry leader covering the full range of payment needs for our clients Treasury services, which is helping companies pay their employees, pay their suppliers, move money around and manage their deposits. To merge the acquiring, which is helping companies collect money from consumers and deliver a strong payments experience there, all the way to trade finance, where we help with financing receivables and global trade. It is a huge organization. We have about 30,000 colleagues all around the globe and our clients really spend also across about 120 currencies, so it's a huge business focused on the payments needs of our institutional clients.
Speaker 3:Okay, and how does it fit into the broader sort of JP Morgan and Chase company?
Speaker 2:Payments is a very integrated part of JP Morgan Chase and we have connectivity with many other businesses across the firm.
Speaker 2:First of all, on the client coverage side, we work with organizations that cover all these clients.
Speaker 2:There's the global corporate bank that works with and supports multinational clients and largest companies. We work very closely with the commercial bank that serves middle market companies in North America but also globally, and we also work with our business banking business that serves small and medium sized business, particularly in North America. So that is on the coverage side. But we also work with a bunch of other businesses across JP Morgan Chase to truly deliver what assets we have across the firm to our clients. We have, for example, a close partnership in the US with our credit card issuing business, because if we put payment processing and credit card issuing together, we can offer really unique solutions to our clients, because it's not just about processing payments but also the insights and the fraud protection that you get from a two-sided network at the end of the day. We work very closely with our markets business because we have the world-leading FX franchise for an exchange that we can also deliver to our clients who want cross-border payments. So there's a lot of connectivity with the different parts of JP Morton.
Speaker 3:Okay, great. So you've explained sort of what you do in this big global scale and big company and all the markets you serve. Who do you compete against?
Speaker 2:That is a really interesting part of our business. We compete, on the one hand, against other banks this is particular in our treasury services business, where most providers are the large banks global banks, local banks who cover clients and also help them move money and process payments. Especially on the commerce and the merchant services side, we primarily compete with fintech firms who deliver specific solutions, tech-first solutions, and have also grown significantly in the last 10 years, let's say. But we are the only bank, the only institution, I would say, who really has these different businesses under one roof and therefore we combine the strength of a regulated financial institution with its scale, safety, stability, with the strength of a tech-first organization that we also are, that focus on modern infrastructure, modern APIs, great customer experiences, and that is what makes us unique against all of these competitors that we really offer our clients the benefits of a large, stable partner, together with the innovativeness and the technology strengths that some of our fintech competitors bring to the table, but no one else has it in the same way as we have.
Speaker 3:Okay, so you mentioned a few things there that differentiate you Are there other differentiators from your competitors?
Speaker 2:It really depends on the specific situations. If we compete with banks, they are also regulated.
Speaker 2:They often have a global network, but they operate in, as I said, 120 countries with branches and people everywhere. When they're removed, $10 trillion a day. So our scale is really a differentiator and also our ability to innovate, to try out new solutions is really special. These are the other banks, these are the fintech players. We are in many ways on par and sometimes even ahead, even when it comes to tech innovations. If you see some of our launches last year around tap to pay, around pay by bank. That is something we brought to the market before even any of the fintech competitors were there. But then we do have customer service. We provide credit, we have all these other assets that I mentioned earlier. Foreign exchange partnership is the consumer cards business that they don't have and therefore we can really differentiate us against each of those competitors through the capabilities that we bring to bear.
Speaker 3:Okay. Well, when you step back and look at the payments industry holistically, where do you think it's headed in the next couple of years? Maybe the next, maybe two to three years, and then, looking out even longer term, maybe 10 years.
Speaker 2:One thing I love about payments is the fast pace and the amount of change and innovation that is happening, and therefore even predicting a few years where the payments business is going is an interesting question. I do think the fastest changes we see at the moment in the commerce area, where new solutions are gaining traction very quickly Think, for example, biometric payments, where, as a consumer, you can just blink your eyes or swipe your hand and pay that way in the store. Or you have unique solutions that are truly omni-channel, where you buy something at home and then, if it gets delivered and you want to change it, you can just go to a store and change it out there. So enabling these unique commerce experience is something where we see a lot of change and us seeing a lot of changes even today.
Speaker 2:The second big piece is the rise of real-time payments and cross-border payments and what it means for the payments business around the world. Historically, you could basically move money as a treasure or as a CFO, monday to Friday, 9 to 5. Now, with real-time payments, the expectation is that you can do this 365 days a year, all around the clock, and that is, for the payments industry, a big challenge, because you need to run your infrastructure differently. You need different client service, and those are also changes and investments that we are seeing already come to fruit right now. Projecting what is happening 5 to 7 years out is even harder.
Speaker 2:I do think, though, that some of the developments around payments and commerce, identities and using biometrics to the next level will be very interesting, when, ideally, as a shopper, you will be in a position to use your identity and pay right away in more and more instances, and a client told me a few weeks ago that, basically, their vision is that payments just become invisible and it's so easy and so smooth that you don't even realize when you pay, and that the process becomes completely invisible, and I think that is a great ambition where we could go. And then, at the same time, payments, of course, need to continue to be safe and compliant, so meeting requirements around sanction, screening, fraud protection become more and more important, because we do see also adverse actors becoming more and more sophisticated, and we want to support our clients in having trustworthy, safe and reliable payments.
Speaker 3:Yeah, I think you mentioned several things there that I often do here, and it's kind of the perfect storm if all these things come together where we can get faster payments and less friction and they truly become almost invisible. I think that's a great, I think that's Nirvana, and if we could get there, wouldn't that be wonderful for the consumers? And then, like you said, building those customer journeys where completely omnichannel I mean, those are the things that I often hear, so I really appreciate your input on that one.
Speaker 2:Yes, and they have also been talking about the difficulty of making predictions. Two years ago, maybe three years ago, there was a lot of buzz in the industry around cryptocurrencies and distributed ledger. This really changed over the last two years. Now other topics are on vogue, so it is really hard also to predict the trends that stick at the end of the day, what is important for us as a leader in innovation?
Speaker 2:We do bucket our investments in three categories. One is Horizon One Investments. Those are basically known client needs and capabilities we need to build immediately, very clearly defined, and that is the bulk of our investments. When there is Horizon Two Investments, those have more three to five year horizon. Those are interesting new ideas, interesting new products where we already see early traction and we are investing to ensure we lead the market and we launch new products where we already see traction. And then we have a third bucket, that is Horizon Three, where we do research, we do experimentations and many of this is new. We do this a lot with a seven to 10 year horizon. We don't know which one's pan out, but we want to make sure that we are well positioned.
Speaker 2:And one thing I also always learned and have seen over time in payments. It is really important that you invest consistently, year after year after year after year, to strengthen your platform, strengthen your solutions and be able to innovate. It's impossible, in my view, to just say, one or two years we make a big splash. You have to be very consistent and evolve your platform as the market and client needs evolve too. Yeah absolutely.
Speaker 3:Thanks for sharing that. Well, let's switch gears a little bit and let's talk about you. So you mentioned a little bit about your professional journey, but maybe fill in some of the gaps on your professional journey, how you got to the role you're in there now.
Speaker 2:Yes. So I joined JP Morgan Chase, as I said, almost 11 years ago, as head of strategy, and that was a fantastic seat, looking at the full breadth of the company investment banking, consumer business, wealth management, asset management and also working very closely with Jamie Diamond and our operating committee on the true priorities for the business. And I really enjoyed that role, supporting and advising our businesses. But then payments because of the amount of change and because of the importance it has for the company overall, because what does the bank do at the end of the day? It moves money, ie payments, you lend money and you give advice. Those are broadly the three areas. So payments is really critical to the company. And then Jamie said to me one day Max, it's time that you also not just give advice but run the business. And you moved me to run our Merchant acquiring franchise, and that was at the beginning of 2020. And I jumped in two feet.
Speaker 2:Two feet first, and two months later we were hit by the COVID pandemic, which was for me also a very interesting leadership challenge to not only take over the business but also lead it right away to all the disruptions that COVID brought by. But it was really a bonding experience, both with our teams as well as with our clients, to jointly go through the pandemic and the difficult time there, although, especially for our Merchant Services business, the pandemic also offered a lot of opportunities, because people needed to move to online payments, e-commerce, and we were very well positioned there. And then, in the summer of 2021, so about two and a half years ago I brought my responsibilities to also take over the Treasury Services payments business, which is basically the payment rates that we manage around the world, as well as a business that we call embedded finance and solutions, where we bundle some of our new developments, the value added services that we offer around payments, such as holding money for our clients, fx or data analytics, as well as the industry solutions, where we have businesses that focus on specific industries and have dedicated services and teams, for example, public sector clients, automotive clients or marketplaces. So that has been the journey.
Speaker 2:Here. We really have a strong investment story, I would say, and, as a company, jp Morton Chase is really embracing the importance of payments, which means we invest consistently, we grow the business and the client feedback and the results really speak for themselves.
Speaker 3:Okay, so you're running a very large organization and leadership is very important. So how do you personally define success and leadership?
Speaker 2:If you ask about what are the ultimate success criteria, it comes down to what do you want to leave?
Speaker 1:behind Azure Legacy.
Speaker 2:When you do one day something different or you leave what you basically leave behind, and what I would want as a success is that. Number one we have really made sure that the business is seen as an industry leading franchise focused on the needs of our clients. People will say this is well set up, this is a Cutting-edge, leading business that can compete with everyone and is better, and we are. Our clients at the end of the day, say there are solutions that we can only get from JP Morgan payments In.
Speaker 2:One of the big sources of day-to-day satisfaction for me, to be very honest, is also when we win business from clients against our competitors in, you know, very competitive situations and they choose us because we have the best solution in the market. So there is one dimension of success. I think there is another important dimension of developing and putting together a world-leading team at the end of the day, with a diverse set of leaders that would say that I helped them grow, I, I provided them opportunities and that really came together as a leadership team and we spent so much of our Woken hours at work that it's really important for me to also have a team where people trust each other, they have each other's back. They work hard and they grow. So that is probably a second dimension that I hope one day I can look back to, where people will say that is a unique business that was created that way.
Speaker 3:Okay, well, you've talked a lot about innovation and then, obviously, about culture. So let's, let's talk about those together. So how do you foster a culture of innovation among your team? And then, how do you empower them to take risks and and you know experiment with things?
Speaker 2:This is a great question and that I thought a lot about, and the reason is the question you asked earlier about our competitors. In payments, even more than in other parts of JP Morgan Chase, we do face the competition of FinTech players head on that do lead through technology, that do lead to innovation, and that competition has made us better Because we needed to respond there and we needed to basically beat them. All said their own game. What have we done to achieve that? First of all, talent mix is a very important component. If you look at my leadership team, there's folks that have banking background, that know the payment rails, that know regulation for a long time, but we've also brought on a lot of leaders with a tech background, with a FinTech background, that have seen it in other places, that have done it in other places and have also now done it at the JP Morgan platform. So the talent mix has been one important component. The second is we've also, in many places, change the organization to innovate better.
Speaker 2:Historically, in banks, you have a front office those are sales people and product people and then you have technology and operations that are classified often more as middle and back office. We have done this very different in payments, where Operations and technology are, in most cases, the product and the service. So we've created integrated teams with one leader who looks after product and technology, product and operations together, which allows the teams to be much more nimble, much more agile and innovate better. So that is probably a second change we made. A third change we made is that we work a lot more with third parties.
Speaker 2:Historically also, banks always thought they, you know, need to build all the solutions in house and and only what is done in house by the old tech team is worth offering to clients. We now work with partners and third parties in all kinds of constructs, through commercial partnerships, through investments, through M&A, even to accelerate our roadmap or de-risk our roadmap and deliver innovations faster and better for our clients. On that one, you have to be very disciplined, because people come with ideas for partnerships or investments all the time that you have a clear roadmap and then you do partnerships and investments wherever it truly fits to your roadmap. But that has also helped us deliver better and quicker for our clients easily. So those are some specific examples of how we are looking to be nimble and agile and more innovative in the market.
Speaker 3:Okay, well, how do you strategically lead your team to be competitive in this space?
Speaker 2:There's a number of items that I personally do to help shape the priorities and the agenda. Number one you have to be open-minded and listen to your clients. I do spend actually quite a lot of my time with client conversations, with signed discussions, client dialogue, and listen to what they want, what they need, what is important to them, because ultimately, that is what we do. We serve our clients and we need to understand what their needs are. We need to meet the needs and anticipate the needs and make sure we deliver on them. So I see that as an important component that I have also a direct source to our clients and ensure that this can be used to triple check our roadmap and our priorities.
Speaker 2:The second thing which is also interesting is get out and travel. I do travel a lot. I visit our locations and clients all around the world in North America, asia, europe, latin America. I go to trade fairs and conventions to get a sense of ideas, trends, so that I can also form my own view what is important and how to prioritize and see how things work. And then it is also important, when you collect all that input, that you distill it for your team and ensure that this is brought down to very few two, three, maybe four priorities for each of the businesses per year or per time period, so that we don't only agree on what is important but also on how it is done to make sure that things get delivered, because payment is such a broad area and with such a global footprint. There's many, many things we could do, but it's important to focus the team on the extra things that we will do and define and then execute on those priorities to make sure that things ultimately happen.
Speaker 3:Okay. Well, Max, what are some things you're passionate about? Maybe it could be work related or even outside of work.
Speaker 2:There's many, many things I'm really passionate about. One thing I do consciously try is balance my passion for payments and for our clients and for work with also passion for other things in life that really broaden the horizon. I do love and spend a lot of time doing sports. I love skiing, I love playing tennis. It's a great way to spend time with the family and friends, which is, for me, a very important counterbalance that help you often put the things in work and work in the right perspective. Another thing that I really love is going to the theater and going to the concerts. I live here in New York City and we are blessed with so many world-class institutions here where you can literally just slip out at night after work and listen to a great concert or see an inspiring play, which then often brings you new ideas, new perspectives and different thoughts. I think that balance is important for me personally to maintain a broad perspective, but it's also good, as passionate as I am about work, to really level things out when needed.
Speaker 3:Okay. Well, this next question. I love to ask people because everyone has kind of their own unique experiences they can bring to the table. But what advice would you give to someone who's just starting out in the payment space?
Speaker 2:When you start out in the payment space. The things that I would suggest as the following? Number one be open-minded. It's such a broad area with so many opportunities that it really benefits someone, especially early in their career, to test out different things and form the perspective in terms of what they really excite them and where they want to learn more and just dedicate their time. I think finding the right people to work with if I look back on my career, is probably always the most important thing. Where do you think you get the best apprenticeship? Who do you think provides you the best learning opportunities? Who gives you new ideas? Those are the individuals. When I think back when I started my career, where I benefited a lot and there's a whole bunch of mentors and supporters in hindsight, endlessly grateful about the opportunities they offer to me. Finding the folks you would like to work with that will help you and that will help you drive your career is probably the most important thing to do. What the actual topic is, or the context, is almost secondary.
Speaker 2:Those would probably be the two important things. To say it again One, be open-minded and open to try different things and then find your right team, find the right mentors and people you enjoy working with. That then create the opportunities for you.
Speaker 3:Okay, great Thanks for sharing that. One last question and we're going to circle back to JPMorgan Payments what makes JPMorgan Payments such a great place to work?
Speaker 2:Number one the people. We have a great team here, very diverse, and what I love here smart people, dedicated people, people who work hard, who row in the same direction, but ultimately also good individuals. That is, for me, always the most important piece because, as I said earlier, we spend so much time at work. It better be with people you enjoy hanging out with and you enjoy being on one team. Jpmorgan has a very hard charging but collaborative culture that is really an enjoyment to be part of. That is probably the most important reason for me the people.
Speaker 2:In addition, what I really enjoy here is the willingness to invest in payments and the willingness to build a world-leading franchise, not for the years but for the decades to come, in good times and in bad times, and that gives us a lot of comfort that we have roadmap, we can commit to our clients, we can deliver our clients and we get things done. That is probably a second piece. Then the third piece is I'm just always stunned by the strength of the assets we have at JPMorgan. I said it a bit at the beginning we are the only payments business, with MS and TS and trade finance all under one roof. We are the only institution at this scale that has the FX business, the partnership with others, and you can really see it how that delivers value for our clients. That is also the item when folks join us externally. That they find striking is the capabilities we have and how we bring them to bear in the market, as well as the reach that JPMorgan has all around the world. Those are things that make me very proud.
Speaker 3:Okay, great Max, we've covered a lot of ground. We've talked about you, we've talked about the industry, we've talked about the company. Is there anything else you'd like to add before we wrap up the show? No, Okay, great Max. Well, thank you so much for being on the show today. I know your time is very valuable, so I really appreciate you being here.
Speaker 2:Thank you, Greg, for inviting me, and thank you for allowing me to share my passion for payments. It's really been fun to do this with you.
Speaker 3:Absolutely. I really appreciate it To all you listeners out there. I thank you for your time as well, and until the next story.
Speaker 1:Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at Leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.