Sibos 2020: JP Morgan CEO tells banks “don’t outsource your soul”
Banks are at risk of going too far in the name of digital transformation and outsourcing their souls, says Jamie Dimon, CEO of JP Morgan Chase.
Dimon tells the Sibos audience he has some outsourcing “horror stories”
Speaking at the virtual Sibos 2020 event this week, Dimon waxed lyrical about the potential for new technologies.
Yet he also cautioned that some banks have overstepped the mark and created plenty of “horror stories” in the process.
“I don’t like outsourcing your heart, your soul, and your spinal cord,” says Dimon. “I think a lot of companies that ‘outsource’ have no idea what they’re doing.
“You end up paying too much money and then you’re beholden to costs that are going up. You’re not even doing a better job serving your client.”
About whether banks should focus on building in-house, buying, or partnering with fintechs, Dimon is bullish.
“I will spend whatever it takes to win in this business. If that means another $2 billion a year then so be it. I really mean that.”
Dimon says that money only becomes wasted when the management and the process is wrong. “Often you don’t need more money you just need to run it better.”
The JP Morgan CEO says he has no problems with his bank building out services 100% in-house. At the same time, he is open to partnering.
“It all relates to the specific business issue at hand. If you’re building a piece of software that’s going to be used by 800 million people, and the one I’m building is going to be used by a handful, I obviously can’t build better than you can.
“It’s also a very good idea to buy companies that are ahead of us. We could have done what they’re doing, but we just didn’t.”
Support for cloud
Dimon emphasises the importance of the cloud to financial services. “Total. Real. Critical. You have got to get it done. It’s faster and more effective whether it’s an internal private cloud or private cloud.”
Accenture data shows that 77% of major banks have core cloud practices in place and a roadmap for their execution over the next few years.
“We’ve been on that journey and maybe around 20% of our stuff is on the cloud but we have to get it all there.”
The JP Morgan CEO says there has been “very little effective use” of blockchain technology despite it being around for ten to 12 years.
JP Morgan moved its Quorum blockchain enterprise to Brooklyn following its acquisition by ConsenSys. JP Morgan has also made an undisclosed strategic investment in ConsenSys.
“It’s a very complicated technology that has to be rolled out by use case,” he says. “We’re at the forefront of trying to use blockchain for various things. It will dramatically reduce problems.”
Related: JP Morgan fires staff for COVID-19 relief funds fraud
In banking, if you want to get hands-on knowledge from a CEO/CIO, go to Jamie Dimon. He knows the territory, and at the House Committee on Financial Services hearings, he rules, even though the largest bank in the U.S. has made some mistakes.
I think it’s about time that big banks in the United States start to rethink their loyalty to their customers if they would like to keep them what do I know I worked at ABN Amro and I started my career at Anderson Consulting with an e in 99 when Banks actually still paid points and interest that made sense and there were not cover ups for Bank such as chase that ruined small businesses credit during coronavirus to Say the least 🙂
I had the unique and rewarding experience to meet with and advice Mr Dimon when working for a major consultancy during the initiation of the Bank One/Chase Merger. These statements from Mr Dimon are at best dissapointing. He was the respected champion of owsning not outsourcing core competencies.The utter and complete organizxation nd system failures exposed by Chase’s handling of PPP demonstrated that Chase has no ability to control even the most fundamental bank process… loan processing. It is disappointing to see statements from Mr. Dimon indicating he is listening to the snake oil sales pitch around “block chain”. Chase fundamentally failed at equitably serving client needs and provided a system and culture that defrauded tax payers out of 100’s of millions of dollars (by their own admission). No “magic tech” will fix this problem. Chase is suffering from a systemic failure of operational management, oversight, and culture. Mr. Dimon, please, return to your root core principals. Fix the organization first!