This is an excerpt from a story delivered exclusively to Business Insider Intelligence Fintech Briefing subscribers. To receive the full story plus other insights each morning, click here.
In reference to China’s progress in AI and fintech, JPMorgan Chase CEO Jaime Dimon said, "it’s hard not to be both impressed and a little worried," per his annual letter to shareholders.
Business Insider Intelligence
At the end of 2018, Dimon dispatched a group of executives to China to investigate the country’s fintech progress. The team visited companies using machine learning to open accounts instantly or pay out claims based on smartphone images, slashing the time it takes to complete them, per Gordon Smith, copresident and head of JPMorgan’s consumer business. Dimon’s comments suggest the US’ biggest bank is acutely aware of the opportunities emerging tech presents.
Here’s what it means: JPMorgan is already committing a whopping $11.4 billion to technology in 2019, and Dimon’s comments appear to reinforce the bank’s commitment to digital transformation.
- Dimon acknowledged the bank’s lagged on innovating in the past, suggesting a willingness to learn from that inertia. Dimon noted his unwillingness to adopt the cloud in the past as an example of the bank’s sluggishness on the innovation front. However, the bank is now well aware of cloud computing’s capabilities and is committed to implementing the technology at full speed, he added.
- The fact that Dimon highlighted China’s efforts in AI in particular points to the bank’s bullish stance on the tech. Dimon notes that one major benefit of cloud is the added computing power that will enable the bank to deploy AI more extensively across its business. This will include deploying virtual assistants to staff internal help desks, tack errors, and route inquiries.
- But despite the buzz around AI and its impacts on financial services, we’ve yet to see widespread deployment of stand-alone and scalable solutions. JPMorgan is only beginning to take advantage of the opportunities it presents, according to Dimon. And this gradual adoption is illustrative of how we expect progress to be made: incremental evolution versus instant revolution.
The big picture: Dimon’s comments reiterate what banks are feeling across the financial services industry: Fintech disruption is taking place on a global scale and incumbents need to learn from — and safeguard against — them.
- Incumbents are fully aware of the threats posed by fintechs, and they’re fighting back. PayPal and Square were name-checked by Dimon as he explained how fintech disruptors have swept the rug from under the feet of incumbents in recent years. But many incumbents are now hitting back: JPMorgan, for instance, has launched a stand-alone challenger brand, Finn, as it seeks to replicate the agile and innovative approach of fintechs. This combination of resources incumbents have with the agility of fintechs is a powerful combination we expect more legacy players to adopt.
- China’s growing technological prowess highlights the increasing distribution of financial services best practices. That the US’ biggest bank is looking to China illustrates that the most innovative developments in financial services are no longer limited to traditional powerhouses. Instead, the global distribution of fintech is increasingly creating "best of breed" providers across regions. Incumbents would be wise to widen their competitive lens, much like JPMorgan is doing, both across the industry and geographies to keep up with developments that are transforming the industry.
Here’s an industry opinion, as told to Business Insider Intelligence:
“Jamie Dimon has arguably touched upon the most important technology topic for the coming decade. It should create an important debate that results in national policies being implemented to prioritize technology innovation including AI. Those which fail to do this will be at a serious disadvantage and this is particularly pressing for the US. It has been well documented that China has a very public and extremely well-funded commitment to AI. Given China’s governmental processes, it is able to move extremely quickly and fast forwardhow the country uses data and technology for their progress. ” — Sankar Krishnan, Capgemini executive vice president, banking and capital markets
Interested in getting the full story? Here are two ways to get access:
1. Sign up for the Fintech Briefing to get it delivered to your inbox 6x a week. >> Get Started
2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Fintech Briefing, plus more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
- SMB LENDING REPORT: How alt lenders are providing SMBs with new funding options, and the ways incumbents can respond to stay ahead
- Consumers want digital services and banks are finally providing them
- TransferWise is in talks to raise another $300 million — putting it at a $4 billion total valuation