JPMorgan will make some of its cloud-backed technology available to institutional clients later this year, allowing firms like BlackRock Inc. to access balances, research and trading tools. The move, which lets clients bypass salespeople and support staff for routine information, is similar to one Goldman Sachs Group Inc. announced in 2015.
JPMorgan’s total technology budget for this year amounts to 9 percent of its projected revenue -- double the industry average, according to Morgan Stanley analyst Betsy Graseck. The dollar figure has inched higher as JPMorgan bolsters cyber defenses after a 2014 data breach, which exposed the information of 83 million customers.
“We have invested heavily in technology and marketing -- and we are seeing strong returns,” JPMorgan said in a presentation Tuesday ahead of its investor day, noting that technology spending in its consumer bank totaled about $1 billion over the past two years.
One-third of the budget is for new initiatives, a figure Zames wants to take to 40 percent in a few years. He expects savings from automation and retiring old technology will let him plow even more money into new innovations.
Not all of those bets, which include several projects based on a distributed ledger, like blockchain, will pay off, which JPMorgan says is OK. One example executives are fond of mentioning: The firm built an electronic platform to help trade credit-default swaps that sits unused.
‘Can’t Wait’
“We’re willing to invest to stay ahead of the curve, even if in the final analysis some of that money will go to product or a service that wasn’t needed,” Marianne Lake, the lender’s finance chief, told a conference audience in June. That’s “because we can’t wait to know what the outcome, the endgame, really looks like, because the environment is moving so fast.”
As for COIN, the program has helped JPMorgan cut down on loan-servicing mistakes, most of which stemmed from human error in interpreting 12,000 new wholesale contracts per year, according to its designers.
JPMorgan is scouring for more ways to deploy the technology, which learns by ingesting data to identify patterns and relationships. The bank plans to use it for other types of complex legal filings like credit-default swaps and custody agreements. Someday, the firm may use it to help interpret regulations and analyze corporate communications.
Another program called X-Connect, which went into use in January, examines e-mails to help employees find colleagues who have the closest relationships with potential prospects and can arrange introductions.