Another idea being studied would be to create products powered by the bank’s internal risk management platform, known as Athena. Regional banks could plug into JPMorgan’s services to, say, value a portfolio or receive data feeds.
“If there is a way for us to build Bonds ‘R’ Us, then we want to be a part of that rather than someone else”
People tend to overestimate change in the near term and underestimate it over the long term, Hudson says. In fact, life will be pretty similar a year from now but probably really different in 10 years. (Recall that the first iPhone made its debut in June 2007; today there are more mobile devices than human beings.)
A business that’s ripe for change is debt capital markets, where companies borrow money by creating bonds. An automated auction technology could someday replace the current, human-heavy process for issuers who have high credit ratings, Hudson says. “If there is a way for us to build Bonds ‘R’ Us, then we want to be a part of that rather than someone else,” he says. Such a future would be devastating for the investment bankers who currently make a tidy living performing just such a function.
Still, in an industry hyperfocused on the next quarter, it’s difficult to say whether Hudson’s more ambitious bets will ever pay off. The bank could decide to scuttle its new trading service, or the service might simply not catch on with asset managers. In 2014, Hudson was part of a team that created an aggregation platform to help trade interest-rate swaps that clients haven’t touched. “My group is an area where it’s OK to fail,” he says. “I guess if I fail too much, Daniel will decide if the model is OK, or if it’s me.”
Automation, Hudson says, is likely to reduce the number of workers across finance and change the composition of those who are employed to include more technologists and fewer traders. Last year the bank created a machine-learning program to interpret commercial loan agreements, eliminating 360,000 hours of legal work a year. Even more modest advances, such as big-data-powered tools for institutional salespeople that Hudson is working on, will have an impact. “People are free to spend more time with clients and add more clients, or we’ll need fewer of them,” he says. “Either way, the result is you’ll get efficiency gains.”
As we wrap up our hourlong conversation, Hudson mentions that his parents were journalists in South Africa. Feeling a pang of anxiety, I ask him if machine-learning programs could automate the writing of financial news. His brow furrows, and he’s quiet for a minute. His answer? Feed the machine my interview notes, and it could probably produce a rough draft.
Hudson’s ideas may go nowhere, or they could change the world. In the meantime, as long as his boss is willing to sign $50 million checks, a tiny seed of disruption is planted wherever his mind takes him.
This article was provided by Bloomberg News.
This article was provided by Bloomberg News.