Jamie Dimon, CEO of JPMorgan Chase, testifies through the Senate Banking, Housing and City Affairs Committee listening to titled Annual Oversight of Wall Road Companies, within the Hart Constructing on Dec. 6, 2023.
Tom Williams | Cq-roll Name, Inc. | Getty Pictures
Jamie Dimon, the veteran CEO and chairman of JPMorgan Chase, stated he was satisfied that synthetic intelligence could have a profound impression on society.
In his annual letter to shareholders launched Monday, Dimon selected AI as the primary subject in his replace of points going through the largest U.S. financial institution by belongings — forward of geopolitical dangers, current acquisitions and regulatory issues.
“Whereas we have no idea the total impact or the exact charge at which AI will change our enterprise — or the way it will have an effect on society at massive — we’re utterly satisfied the results might be extraordinary,” Dimon stated.
The impression might be “probably as transformational as a few of the main technological innovations of the previous a number of hundred years: Assume the printing press, the steam engine, electrical energy, computing and the Web.”
Dimon’s letter, learn extensively within the enterprise world due to his standing as one of the crucial profitable leaders in finance, hit all kinds of matters. The CEO stated that he had ongoing considerations about inflationary pressures and reiterated his warning that the world could also be coming into the riskiest period in geopolitics since World Struggle II.
However his concentrate on AI, first talked about in Dimon’s annual letter in 2017, stood out. The expertise, which has gained in prominence since OpenAI’s ChatGPT grew to become a viral sensation in late 2022, can generate human-sounding responses to queries. Enthusiasm for AI has fueled the meteoric rise of chipmaker Nvidia and helped propel tech names to new heights.
JPMorgan now has greater than 2,000 AI and machine studying workers and knowledge scientists engaged on 400 purposes together with fraud detection, advertising and threat controls, Dimon stated. The financial institution can also be exploring using generative AI in software program engineering, customer support and methods to spice up worker productiveness, he stated.
The expertise might in the end contact all the financial institution’s roughly 310,000 workers, helping some staff whereas changing others, and forcing the corporate to retrain staff for brand new roles.
“Over time, we anticipate that our use of AI has the potential to enhance just about each job, in addition to impression our workforce composition,” Dimon stated. “It might cut back sure job classes or roles, however it could create others as effectively.”
Listed here are excerpts from Dimon’s letter:
Inflationary pressures:
“Many key financial indicators immediately proceed to be good and probably bettering, together with inflation. However when waiting for tomorrow, circumstances that may have an effect on the long run must be thought of… The entire following elements look like inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of world commerce, capital wants of the brand new inexperienced financial system, and probably greater power prices sooner or later (despite the fact that there at the moment is an oversupply of fuel and plentiful spare capability in oil) attributable to an absence of wanted funding within the power infrastructure.”
On the financial system’s gentle touchdown:
“Fairness values, by most measures, are on the excessive finish of the valuation vary, and credit score spreads are extraordinarily tight. These markets appear to be pricing in at a 70% to 80% likelihood of a gentle touchdown — modest progress together with declining inflation and rates of interest. I consider the percentages are lots decrease than that.”
On rates of interest & industrial actual property:
“If long-end charges go up over 6% and this improve is accompanied by a recession, there might be loads of stress — not simply within the banking system however with leveraged firms and others. Keep in mind, a easy 2 proportion level improve in charges primarily lowered the worth of most monetary belongings by 20%, and sure actual property belongings, particularly workplace actual property, could also be value even much less as a result of results of recession and better vacancies. Additionally keep in mind that credit score spreads are likely to widen, typically dramatically, in a recession.”
On a breakdown between banks and regulators:
“There may be little actual collaboration between practitioners — the banks — and regulators, who usually haven’t been practitioners in enterprise…. Sadly, with out collaboration and ample evaluation, it’s exhausting to be assured that regulation will accomplish desired outcomes with out undesirable penalties. As an alternative of continually bettering the system, we could also be making it worse.”
On rising geopolitical dangers:
“Russia’s invasion of Ukraine and the following abhorrent assault on Israel and ongoing violence within the Center East ought to have punctured many assumptions in regards to the path of future security and safety, bringing us to this pivotal time in historical past. America and the free Western world can not preserve a false sense of safety primarily based on the phantasm that dictatorships and oppressive nations will not use their financial and navy powers to advance their goals — significantly towards what they understand as weak, incompetent and disorganized Western democracies. In a troubled world, we’re reminded that nationwide safety is and at all times might be paramount, even when its significance appears to recede in tranquil occasions.”
On social media:
“One frequent sense and modest step could be for social media firms to additional empower platform customers’ management over what they see and the way it’s offered, leveraging current instruments and options — like the choice feed algorithm settings some provide immediately. I consider many customers (not simply dad and mom) would recognize a better skill to extra fastidiously curate their feeds; for instance, prioritizing academic content material for his or her kids.”
An replace on the First Republic deal:
“The acquisition of a significant firm entails a whole lot of complexity. Folks are likely to concentrate on the monetary and financial outcomes, which is an inexpensive factor to do. And within the case of First Republic, the numbers look slightly good. We recorded an accounting achieve of $3 billion on the acquisition, and we informed the world we anticipated so as to add greater than $500 million to earnings yearly, which we now consider might be nearer to $2 billion.”
JPMorgan acquired a lot of the belongings of First Republic final yr for greater than $10 billion after regulators seized the agency amid the regional banking disaster.
