Jamie Dimon, CEO of JPMorgan Chase, testifies in the course of the Senate Banking, Housing and City Affairs Committee listening to titled Annual Oversight of Wall Road Corporations, within the Hart Constructing on Dec. 6, 2023.
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Jamie Dimon, the veteran CEO and chairman of JPMorgan Chase, mentioned he was satisfied that synthetic intelligence can have a profound influence on society.
In his annual letter to shareholders launched Monday, Dimon selected AI as the primary matter in his replace of points going through the most important U.S. financial institution by property — forward of geopolitical dangers, latest acquisitions and regulatory issues.
“Whereas we have no idea the total impact or the exact price at which AI will change our enterprise — or the way it will have an effect on society at massive — we’re fully satisfied the implications will probably be extraordinary,” Dimon mentioned.
The influence will probably be “probably as transformational as a number 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 broadly within the enterprise world due to his standing as one of the vital profitable leaders in finance, hit all kinds of subjects. The CEO mentioned that he had ongoing issues about inflationary pressures and reiterated his warning that the world could also be coming into the riskiest period in geopolitics since World Battle II.
However his give attention to AI, first talked about in Dimon’s annual letter in 2017, stood out. The expertise, which has gained in prominence since 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 in chipmaker Nvidia and helped propel tech names to new heights.
JPMorgan now has greater than 2,000 AI and machine studying staff and information scientists engaged on 400 purposes together with fraud detection, advertising and marketing and danger controls, Dimon mentioned. The financial institution can also be exploring the usage of generative AI in software program engineering, customer support and methods to spice up worker productiveness, he mentioned.
The expertise may finally contact all the financial institution’s roughly 310,000 staff, helping some staff whereas changing others, and forcing the corporate to retrain staff for brand spanking new roles.
“Over time, we anticipate that our use of AI has the potential to enhance just about each job, in addition to influence our workforce composition,” Dimon mentioned. “It could scale back sure job classes or roles, however it could create others as effectively.”
Listed below are excerpts from Dimon’s letter:
Inflationary pressures:
“Many key financial indicators at the moment proceed to be good and probably bettering, together with inflation. However when looking forward to tomorrow, circumstances that can have an effect on the longer term ought to be thought of… All the following components seem like inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of worldwide commerce, capital wants of the brand new inexperienced economic system, and probably increased vitality prices sooner or later (despite the fact that there at present is an oversupply of gasoline and plentiful spare capability in oil) as a consequence of a scarcity of wanted funding within the vitality infrastructure.”
On the economic system’s smooth 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 smooth touchdown — modest progress together with declining inflation and rates of interest. I imagine the percentages are quite a bit 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 will probably be loads of stress — not simply within the banking system however with leveraged corporations and others. Keep in mind, a easy 2 proportion level improve in charges primarily lowered the worth of most monetary property by 20%, and sure actual property property, particularly workplace actual property, could also be price even much less as a result of results of recession and better vacancies. Additionally keep in mind that credit score spreads are inclined to widen, typically dramatically, in a recession.”
On a breakdown between banks and regulators:
“There’s 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 route of future security and safety, bringing us to this pivotal time in historical past. America and the free Western world can not keep a false sense of safety based mostly on the phantasm that dictatorships and oppressive nations will not use their financial and army powers to advance their goals — notably in opposition to what they understand as weak, incompetent and disorganized Western democracies. In a troubled world, we’re reminded that nationwide safety is and all the time will probably be paramount, even when its significance appears to recede in tranquil instances.”
On social media:
“One frequent sense and modest step can be for social media corporations to additional empower platform customers’ management over what they see and the way it’s offered, leveraging present instruments and options — like the choice feed algorithm settings some supply at the moment. I imagine many customers (not simply mother and father) would admire a better capacity 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 serious firm entails a variety of complexity. Folks are inclined to give attention to the monetary and financial outcomes, which is an inexpensive factor to do. And within the case of First Republic, the numbers look moderately good. We recorded an accounting acquire 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 imagine will probably be nearer to $2 billion.”
