Does advanced artificial intelligence provide an advantage to banks or to their fintech competitors?
This question came up during JPMorgan Chase’s third-quarter earnings call last week.
Longtime bank analyst Michael Mayo, managing director at Wells Fargo Securities, questioned JPMorgan Chase’s increased spending on technology, including on AI. The bank’s expenses of $8.5 billion were up 7% year on year, largely driven by continued investments in staffing, primarily in front office and technology.
“As it relates to AI specifically, which is the talk of the town, the consensus among people outside the banking industry is that banks will not win that battle, including JPMorgan,” Mayo said. “You won’t control the front end. What are you doing with AI to make a difference now? Or is this simply a moonshot?”
Jamie Dimon, chairman and CEO of JPMorgan Chase, said he disagreed with the statement.
“AI is an extraordinarily good tool to use,” Dimon said. “We just put a woman who is running it at our table,” he said, referring to Teresa Heitsenrether, who was appointed the firm’s chief data and analytics officer and a member of JPMorgan Chase’s Operating Committee in June.
JPMorgan Chase uses AI for risk, fraud, marketing and prospecting, Dimon said.
“And the management team is getting better and better at saying, how can we use data to do a better job to reduce errors? To serve clients better? To have a salesperson have copilots, that they know why even the client’s calling or something like that,” Dimon said. “And so we simply have to do it. Does it create opportunity for disrupters to come in? Yes, of course. That’s always the truth of technology and — but we’ll be quite good at it.”
In a follow-up email exchange, Mayo explained that advanced AI is likely to intensify the competition between big banks, small banks, fintechs and pure technology companies.
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