I admit I was a little suspect when, a while back, Goldman Sachs CEO Lloyd Blankfein said that Goldman was really a tech firm, not a bank. But more recently, with Goldman's roll out of Marcus, among other ventures, I've been warming up to the idea as Goldman the tech firm. And it seems that Goldman isn't alone when it comes to Wall Street banks transitioning into technology institutions.
JPMorgan is also well on its way to becoming a tech firm. Or, at least, is becoming more reliant on technology to make ends meet in the banking industry. In any case, its programmers have written code to automate numerous functions, including those once handled by top-tier law firms.
At JPMorgan Chase & Co., a learning machine is parsing financial deals that once kept legal teams busy for thousands of hours.
The program, called COIN, for Contract Intelligence, does the mind-numbing job of interpreting commercial-loan agreements that, until the project went online in June, consumed 360,000 hours of work each year by lawyers and loan officers. The software reviews documents in seconds, is less error-prone and never asks for vacation.
JPMorgan's investment in COIN is one of its 2,000 technology ventures and part of its $9.6 billion technology budget, which is equal to 9 percent of its total revenues and nearly double the average tech budget of most Wall Street banks. JPMorgan, like Goldman, is making a big bet that technology will increasingly drive revenues, and so to stay competitive it's throwing a lot of money at and into tech.
“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, [JPMorgan'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.
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.
Of course, with banks increasingly relying on code to create new revenue streams, there are many Wall Street workers who are afraid their jobs could soon become redundant. But there are also many (perhaps just as many) Wall Street professionals, including top tech executives at JPMorgan, who say there's more to cheer than fear when it comes to technological advances on the Street.
While growing numbers of people in the industry worry such advancements might someday take their jobs, many Wall Street personnel are more focused on benefits. A survey of more than 3,200 financial professionals by recruiting firm Options Group last year found a majority expect new technology will improve their careers, for example by improving workplace performance.
“Anything where you have back-office operations and humans kind of moving information from point A to point B that’s not automated is ripe for that,” [JPMorgan Chief Information Officer Dana] Deasy said. “People always talk about this stuff as displacement. I talk about it as freeing people to work on higher-value things, which is why it’s such a terrific opportunity for the firm.”
Displacing or freeing, tech firm or bank, "this stuff" on Wall Street is here to stay. And so, as I mentioned last week, if you're a Wall Street professional or student wanting to be one, you better get with the programming or risk being kicked to the curb by a bot.
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