Jamie Dimon, CEO of JPMorgan Chase, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, at the Hart Building on December 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Jamie Dimon, veteran CEO and Chairman of the Board C. B. Morgan ChaseHe said he is convinced that artificial intelligence will have a profound impact on society.
In his annual letter to shareholders issued Monday, Dimon chose artificial intelligence as the first topic in his update on the issues facing the largest U.S. bank by assets — ahead of geopolitical risks, recent acquisitions and regulatory issues.
“Although we do not know the full impact or the exact rate at which AI will change our businesses — or how it will impact society as a whole — we are absolutely convinced that the consequences will be extraordinary,” Damon said.
The impact will be “likely to be as transformative as some of the major technological inventions of the past hundreds of years: the printing press, the steam engine, electricity, computing, and the Internet.”
Dimon's letter, widely read in the business world because of his status as one of the most successful leaders in finance, touched on a wide range of topics. The CEO said he had continuing concerns about inflationary pressures and repeated his warning that the world may be entering the most dangerous era in geopolitics since World War II.
But his focus on artificial intelligence, first mentioned in Dimon's annual letter in 2017, has been notable. The technology, which has gained popularity since ChatGPT became a viral sensation in late 2022, can generate human-looking responses to queries. Enthusiasm for artificial intelligence has fueled the rapid rise of the chip industry Nvidia It helped push technology names to new heights. a
Dimon said JPMorgan now has more than 2,000 artificial intelligence and machine learning employees and data scientists working on 400 applications including fraud detection, marketing and risk monitoring. He said the bank is also exploring the use of generative AI in software engineering, customer service and ways to enhance employee productivity.
This technology could eventually affect all of the bank's approximately 310,000 employees, assisting some workers while replacing others, and forcing the company to retrain workers for new roles.
“Over time, we expect that our use of AI has the potential to augment nearly every job, as well as impact the composition of our workforce,” Damon said. “This may reduce certain job categories or roles, but it may create other categories or roles as well.”
Below are excerpts from Damon's letter:
Inflationary pressures:
“Many of today’s key economic indicators remain good and may improve, including inflation. But in looking to tomorrow, conditions that will affect the future should be considered… All of the following factors appear inflationary: continued fiscal spending, the re-militarization of the world, and the re-militarization of the world.” The structuring of global trade, the capital needs of the new green economy, and possibly higher energy costs in the future (despite the current oversupply of gas and the abundance of excess energy in oil) due to the lack of necessary investments in energy infrastructure.”
On the soft landing of the economy:
“Equity values, by most measures, are at the high end of the valuation range, and credit spreads are very tight. These markets seem to be calculating a 70% to 80% chance of a soft landing – modest growth along the way.” “With inflation and interest rates low. I think the odds are much lower than that.”
Regarding interest rates and commercial real estate:
“If long-term interest rates go above 6% and that increase is accompanied by a recession, there will be a lot of pressures — not just in the banking system but with leveraged companies and others. Remember, a simple increase of two percentage points. Essentially, rates pushed down “The value of most financial assets is up to 20%, and some real estate assets, especially office properties, may be worth less due to the effects of a recession and high vacancies. Also remember that credit spreads tend to widen, sometimes dramatically, in a recession.”
On the collapse between banks and regulators:
“There is little real collaboration between the practitioners – the banks – and the regulators, who are generally not business practitioners…but it is unfortunate that in the absence of adequate collaboration and analysis, it is difficult to be confident that regulation will achieve the desired results.” “Without unwanted consequences. Instead of continually improving the system, we might make it worse.”
On growing geopolitical risks:
“The Russian invasion of Ukraine, the subsequent hateful attack on Israel, and the continuing violence in the Middle East should have demolished many assumptions about the direction of future safety and security, and brought us to this pivotal time in history. America and the free Western world cannot continue to maintain a false sense of security.” Under the illusion that dictatorships and repressive states will not use their economic and military power to achieve their goals – especially against what they see as weak, incompetent and disorganized Western democracies, we are reminded that national security is and always will be of paramount importance, even if its importance seems to decline in quiet times.
On social media:
“One common sense and modest step is for social media companies to empower platform users with control over what they see and how it is presented, leveraging existing tools and features – such as the alternative feed algorithm settings some are offering today. I think many users (not just parents) will appreciate it.” Greater ability to organize their feeds more carefully; for example, prioritizing educational content for their children.”
Update on First Republic deal:
“There's a lot of complexity involved in acquiring a major company. People tend to focus on the financial and economic results, which is a reasonable thing to do. In the case of First Republic, the numbers look pretty good. We've gone on record to get $3 billion from The purchase, and we told the world that we expect to add more than $500 million to earnings annually, which we now believe will be closer to $2 billion.
JPMorgan acquired most of First Republic's assets last year for more than $10 billion after regulators seized the company amid the regional banking crisis.
