Ameet M. Patel didn't set out to make his mark in bank technology. In fact, the 35-year-old chief technology officer of LabMorgan, J.P. Morgan Chase & Co.'s e-finance and technology development unit, grew up wanting to be a doctor.

But with medical school costs beyond the reach of his family, which had moved from Kenya (where he was born) to their ancestral home in India and eventually to New Jersey, Patel decided as a college freshman to go into electrical engineering. While pursuing a master's degree in computer engineering, he landed a summer internship with a spin-off of Bell Labs, then experimenting with data networking.

Patel was hooked.

He quickly realized, however, that his forte wasn't in R&D but in applying technology to solve business problems. After earning an MBA in finance and IT entrepreneurship, he eventually landed at Chase Manhattan Corp. As chief architect for Chase's national consumer services division, he was responsible for driving development of information-based business system technology for the bank's 30 million customers. He wound up as CTO of, the bank's "New Economy" business unit.

Now, Patel is in the middle of a bank technology whirlwind at LabMorgan, the product of last year's merger of J.P. Morgan & Co. and Chase Manhattan. Bank Technology News talked with Patel in April, shortly after his unit moved into new digs on Wall Street. Here are excerpts from that conversation.

Q. What is LabMorgan and what is its function within JPMorgan Chase?

A. LabMorgan is the centerpiece of the transformation of JPMorgan Chase. We define transformation as the ability to impact change within the internal space of the organization, as well as externally in the marketplace. So just like J.P. Morgan transformed modern finance in the early 20th century, LabMorgan is going to be transforming e-finance for the 21st century.

Q. How?

A. The way we'll do that is threefold. One, we're going to partner with the (JPMorgan Chase) businesses internally, as a

catalyst to re-engineer their internal processes, to enhance revenues and improve cost efficiency. Second, in the external market, we're going to be looking at innovative companies to invest in, but linked back into how we use technology and e-finance companies internally. And the third thing is that we're actually going to build businesses from the ground up to launch them in the external marketplace.

Q. As the chief technology officer, what is your role in this?

A. Technology is the key enabler of transformation. I have an internal team of technologists focused on engineering and transforming ideas that will eminently help (JPMorgan Chase) businesses. Really, the consultant/adviser helps a business transform itself.

On the investments side, my group has a set of folks who get involved in very detailed due diligence on companies we're making new investments in or portfolio companies that need additional capital. We have about 25 checkpoints, where we look at certain issues in terms of a company's ability to succeed, and technology may be a critical element of that. Within the business formation area, the technology team is dedicated to helping the business strategy folks actually build businesses from the ground up and worry about the total life cycle.

Q. How many people are under you?

A. I don't have a large group; it's about 60 to 65 people. So it's really about high-energy people focused on delivery and taking large-leverage external partners, whether hardware or software companies, consulting firms or venture capital companies. We're building a partnership network to provide a truly leverage-able model, so that you can extend the reach of your ability to impact. And we're focused inwardly to partner with the individual lines of businesses' technology groups. We don't pretend to try to do everything by ourselves. In order to be successful in transformation, you have to partner and you have to help people go to the next step.

Q. Are there cultural barriers to that?

A. I don't think there are cultural barriers per se, but there are differences around timeframes. Certain individuals may have a timeframe of months; other people may define transformation as years. I'm very pragmatic in my viewpoint that good transformations take place not in months but in years. It's an evolution. A transformation agent has to be a catalyst on the technical side but also on the cultural side. You have to make people believe that change is good, that change is done by working together, that there's ownership and that we're going to succeed together. We're going to live by our ability to make things happen.

Q. Is that a different role for a CTO?

A. CTOs of the future, we're less focused on technology issues. Technology is an integral part-but it's not everything. The other part is, I think CTOs have to be better in terms of their ability to influence change and the organizational skills they develop. CTOs really start to need a much broader definition of their management skills, rather than being all focused on technology. I think CTOs have to build highly leverage-able partnership bonds both internally as well as externally. It's an evolving role.

Q. Give me an example of the highly leveraged partnerships you talked about.

A. I'll use the example of our investment process that we worked on with the online account aggregation service Yodlee. That's a classic partnership: our retail organization and their business and strategy folks, with the technology team on the retail side, along with the Lab team, as well as the investment team. They got that transaction done very, very quickly-in two to three months. It was both an investment transaction and a commercial agreement to actually build and launch product with Yodlee in a very short period of time.

This was about a year ago, and it was groundbreaking. We went through the whole strategy piece-why aggregation is important from a consumer standpoint, getting people comfortable around that area-as well as the nuances of the technical elements and the ability to succeed. We were also a pro-active adviser to the company, helping them to keep driving their strategy, to make changes, to keep further enhancing the model. Obviously, that benefited our investment, but, more importantly, we firmly believe that aggregation is truly a space that is important for our franchise to build out at each end.

Q. Do most of your portfolio companies combine helping you meet your internal technology needs and just acting as investments?

A. Most of them have that goal, and I think that clearly differentiates us from a pure venture capital fund. The power of the LabMorgan model is really that we can bring investment skills in terms of the dollars and the tight linkage into JPMorgan Partners, which runs the largest venture capital funds worldwide. But the other piece is that internally-on the e-business or the technology side-we're actually using their products, trying them out and going back to them with suggestions for improvement. We're practitioners of how they use the technology.

Also, we're always very proactive in trying to create new ideas for portfolio companies to exploit and in helping them grow their business models in a way that really nurtures their space. And if we define a space like aggregation or wireless or the payments area, we will go in pretty aggressively in capital markets, and use our internal connectivity, in terms of using products and leveraging their capabilities.

Q. How do you overcome the organizational barriers within a big institution like this one?

A. The way LabMorgan is structured, we have internal connectivity. We have e-business strategists that are vertically aligned to each one of their respective businesses within our large institution. They're great at generating ideas, since they specialize in the consumer business or the asset management business or treasury business, and they have a broad range of services that they can pull in.

After we make an investment, it moves into a fully functional development team. Their whole mission in life is to keep connecting the dots, creating new ideas and working with the investment banking organization-technology again being the catalyst in a lot of areas. But if you need management consulting, incubation, business formation or knowledge management expertise, we can bring that in.

This is a full-scale model that is vertically aligned to the e-finance space and tightly linked to the senior management team, so you have tight linkage into the overall management objectives, from (JPMorgan Chase Chairman) Sandy Warner to (President and CEO) Bill Harrison on down.

Q. How has the meltdown in technology stocks affected you?

A. There are two ways to look at it. Portfolios have been impacted, I can tell you that now. I would say that comparable to other venture funds, we're doing very, very well because of the internal traction to the businesses-a lot of the investments that we've made are very critical to large plays that have huge traction. The analogy that I use is when you're using a product, and it's a very good product, it'll keep selling in a good market or a bad market.

But because it's a portfolio, you do have good ones, you have medium ones, poor ones-you have to just constantly manage it. Our portfolio development team, in just managing the process of companies that are in a poor cycle, has been able to be very proactive in providing assistance in a multitude of ways. The investment cycle last year was all about rushing in and making million- dollar investment bets. This year, it's about traction with what we've made.

But, more importantly, we're starting to see really great business models, really good business plans. We're starting to see a few of them. That's the way it should have been-fewer and better and bigger plays. What we're seeing now is a cleansing effect in terms of the quality of deals. And that's a good feeling, because it actually becomes more rational, and it really starts to provide a tremendous impact.

Q. What's the most important technological trend in financial services right now?

A. There are three trends on the technology front that I think are going to evolve financial services. I try not to use the term "revolution," because it takes time to do revolutions the right way. The first is mobility. I mean not just wireless, but the whole influx of PDAs and other new devices that let you access the Internet for services from home or on the road. That redefines workforce productivity, ranging from the investment banker all the way down to the individual who's in the local branch office. Mobility has always been paramount in creating transformation over the last three hundred years, in terms of technology innovation. And mobility is going to increase because of digital technology.

The second trend is around real-time middleware, or straight-time processing or zero latency-the ability to do real-time transactions, the ability of business to see real-time (risk) exposure and real-time issues on the front end, in terms of sales, trading, settlement and exposure. That revolutionizes a firm to think in a different way.

The third element lies in the area of knowing the customer, the whole area of (customer relationship management, or) CRM and warehousing and analytics. This isn't just a retail activity; this is also an institutional activity- knowing the customer becomes even more intimately important, especially in a climate where you have large numbers of customers and with competing products that are in the process of becoming commodities. The intimacy of knowing the customer will become even more important, as will how you use that information.

Q. With real-time middleware, you mentioned the ability to look at risk exposure, something especially important for banks. What role is technology playing in risk management?

A. We've been spending a lot of time in terms of pushing the envelope around technology and the ability to collect the information, crunch through the exposure activity and report on it. There's a lot that goes into that magical black box. There's a "secret sauce" associated with it. It's again a clear differentiator of what we can bring to the table, and we've been focused on that for the last two years.

Q. Can you bottle that "secret sauce" and sell it elsewhere? Does the Lab give you a way to spin that off into things that you can sell to competitors, as the original LabMorgan did with its Risk Metrics software?

A. One of the domains that we have is a commercialization domain, headed up by Peter Miller, the ex-CIO of J.P. Morgan. As a corporation, we spend annually close to about $4.5 billion on technology. And as Denis (O'Leary, co-head of LabMorgan) likes to say, "If you take a life cycle of technology, which is over four years, you're talking about $20 billion at play over a lifecycle in terms of portfolio." (Morgan Chase) uses a number of great technologies that can be commercialized if the right business model exists. So if we know a company can stand by itself and survive, and can actually make money, and all of those wonderful parameters are in place, then we will seize that opportunity. We are constantly looking for opportunities.

Q. What do you think is the biggest issue in financial services that could be addressed through technological innovation?

A. Knowing the customer. It comes down to CRM and systems like Siebel and data warehousing. There are different elements to this: call center technology, CRM and data warehousing, analytics platforms. In the 21st century, and especially in the next couple of years, it will be about building a seamless closed-loop environment where information starts to flow, gets to the right individual, and they're able to make decisions and be proactive.

The reason why this has not been done is not because the technology isn't there; it's because the business models are shifting, as is the ability to understand how all those technology elements come together. We're maturing in terms of understanding what our customers are really looking for and being able to adapt dynamically based upon their requests and their needs. Building the support systems to marry that kind of interaction is really key.

Q. What can't technology do?

A. What technology cannot do-I love answering this question-is replace people, and replace communication and interaction between people. In order for financial institutions to be successful, it's really the people interaction.

Relationships are everything, and having the interaction, the communication, the personal touch is probably the most important element of our abilities as human beings that we cannot automate.

The most effective tools are ones that don't replace our ability to communicate, but they supplement it. As a technologist, I'm very pragmatic. I don't believe that technology solves all problems in this world. Sometimes people have to solve problems.

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