JPMorgan Chase is putting a priority on using technology to automate manual processes and save time, according to its investor letters published today.
In a letter by Matt Zames, the bank’s chief operating officer, JPMorgan Chase detailed some of its strategy in this area. Zames said the bank made automating development life cycles a priority in 2016. For instance, by using automated code scanning, the bank saved nearly 120,000 developer hours during the year. He added that the bank expects to be able to deliver more than 90% of its software through end-to-end automation over the next five years. In other words, much of the software code testing done by humans can be replicated by technology, making the process much quicker.
Zames, along with business leaders of JPMorgan’s various business lines, published their individual letters to shareholders on Tuesday afternoon, shortly after CEO Jamie Dimon issued his annual letter.
Like others, the firm is also looking to robotics and machine learning to automate basic tasks. The bank is looking to robotic process automation to handle 1.7 million administrative requests in 2017, Zames said.
“Machine learning offers another exciting opportunity to drive new capabilities for the firm and our customers and clients,” Zames wrote. “As an example, we recently introduced COiN, a contract intelligence platform that uses unsupervised machine learning to analyze legal documents and to extract important data points and clauses.”
In an initial implementation, the company extracted 150 relevant attributes from 12,000 annual commercial credit agreements in seconds. Zames said it would have taken as many as 360,000 hours a year to perform such a task manually.
“This capability has far-reaching implications considering that approximately 80% of loan servicing errors today are due to contract interpretation errors,” Zames wrote.
In general, cost savings were a common theme of several of the letters from the various leaders of JPM’s business lines.
Zames noted that the bank has introduced “innovative [data] storage offerings, decreasing the price of our lowest tier storage by 75%. We are driving additional efficiency by reducing waste and becoming smarter around technology consumption.”
Gordon Smith, the CEO of consumer and community banking, said JPMorgan Chase remains “fiercely devoted to expense discipline.” He noted the firm has overseen $2.4 billion in structural expense reductions since 2014 and improved overhead ratio from 58% in 2014 to 55% in 2016.
“Importantly, during that same time period, we continued to prudently invest in our core businesses to deliver value for the long term,” Smith added.” In particular, we’ve invested heavily in technology and marketing associated with new product launches, digital and payments innovation, and cybersecurity. Our investments have also improved our control environment, leading to more automated processes, better customer and employee experiences.”