JPMorgan CEO Jamie Dimon intends to compete with Fintechs around the world in both a technical sense as well as through specific use case implementations. Dimon plans to move mainframe apps to a multicloud that implements microservices in order to free up the data currently locked in silos to improve marketing, fraud detection, and to build better AI models.
The stock market reacted negatively, losing almost $12 since the announcement, but if JPM can properly manage this investment at both a technical level and an organizational level, then it should prove to be money well spent. However, if employees see this change as threatening, especially within IT, then it could be $12B down the drain:
“‘[One example is that] card runs on mainframe. We have one of the most efficient, most economic [platforms that underpins], 60 million accounts, etc. But it’s a mainframe system in the old data center.
When it gets modernized, to the cloud, the cost savings by running that and marginalizing it will be $30 million or $40 million a year. That isn’t the reason we’re doing it.
The reason we’re doing it, is once you get that to the cloud that the database that it uses to feed its risk, marketing, fraud, real-time offers and stuff like that becomes accessible to machine learning” he said, adding: “We’re running a whole bunch of major programs, which I don’t think we disclosed, on AWS. And we’re working with Google and Microsoft because we want to have multiple cloud capabilities. This year, roughly 30%, 40%, 50% of all our apps and all data will be moving to [the cloud].
This stuff is absolutely totally valuable… the power of the cloud and big data on risk, fraud, marketing, capabilities, offers, customer satisfaction, do with errors and complaints, prospecting, it’s extraordinary.’ The call came after a year in which JPMorgan entered the UK retail banking market, launching its Chase UK digital-only bank. The proposition has drawn a mixed reception (its Play Store reviews are one way to note that) and been criticised for not supporting open banking, a lack of features and too regular bugs. Dimon added on the call: [When it comes to] Chase UK, we’ve been very, very clear that costs us money.
‘And a lot of you want payback tomorrow and stuff like that. We’ll not disclose those numbers, but we are there for the long run. We’re going to be adding products and services and countries for the rest of our lives, OK? So I doubt, over the long run, we’ll fail. We may not become the best digital bank in the UK or somewhere in the short run…’”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
