Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Companies, in the Hart Building, December 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Jamie Dimon, veteran CEO and president of JPMorgan Chaseexpressed confidence that artificial intelligence will have a profound impact on society.
In his annual letter to shareholders released Monday, Dimon chose AI 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 questions regulatory.
“While we don’t know the total effect or the precise speed at which AI will change our business – or how it will affect society as a whole – we are completely confident that the consequences will be extraordinary,” Dimon said.
The impact will be “perhaps as transformative as some of the major technological inventions of recent centuries: think of 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 financial industry’s most successful executives, touched on a wide variety of topics. The CEO said he was still concerned about inflationary pressures and reiterated his warning that the world could enter the riskiest geopolitical era since World War II.
But the focus on AI, first mentioned in Dimon’s annual letter in 2017, stood out. The technology, which has grown in importance since ChatGPT became a viral sensation in late 2022, can generate human-sounding responses to queries. Enthusiasm for AI has fueled the chipmaker’s meteoric rise Nvidia and helped propel tech names to new heights.
JPMorgan now has more than 2,000 AI and machine learning and data scientists employees working on 400 applications, including fraud detection, marketing and risk control, Dimon said. The bank is also exploring the use of generative AI in software engineering, customer service and ways to increase employee productivity, he said.
The technology could ultimately affect all of the bank’s roughly 310,000 employees, helping some workers while replacing others, and forcing the company to retrain employees for new roles.
“Over time, we anticipate that our use of AI will have the potential to increase virtually all jobs and impact the makeup of our workforce,” Dimon said. “It may reduce some job categories or roles, but it may also create others.”
Here are excerpts from Dimon’s letter:
Inflationary pressures:
“Many key economic indicators today continue to be good and could improve, including inflation. But when looking to the future, it is important to consider the conditions that will affect the future… All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital requirements of the new green economy, and possibly higher energy costs in the future (even though there is currently a supply excess gas and abundant reserve capacity in oil) due to a lack of necessary investment in energy infrastructure.
On the economy’s soft landing:
“Stock values, by most measures, are at the upper end of the valuation range and credit spreads are extremely tight. These markets appear to be pricing in a 70-80% chance of a soft landing – modest growth accompanied by decline.” Inflation and interest rates. I think the chances are much lower than that. “
On interest rates and commercial real estate:
“If long-term rates rise more than 6% and that increase is accompanied by a recession, there will be a lot of stress, not just in the banking system, but also in leveraged firms and others . Remember that a mere 2 percentage point increase in rates essentially reduced the value of most financial assets by 20%, and some real estate assets, notably office buildings, may be worth even less due to effects of recession and rising vacancy rates. Also remember that credit spreads tend to widen, sometimes dramatically, in recessions.”
On a distribution between banks and regulators:
“There is little real collaboration between practitioners – banks – and regulators, who are generally not business practitioners…Unfortunately, without collaboration and sufficient analysis, it is difficult to be sure that regulation will achieve the desired results without undesirable consequences. By constantly improving the system, we risk making it worse.
On growing geopolitical risks:
“Russia’s invasion of Ukraine, then heinous attack on Israel and continued violence in the Middle East should have undermined many assumptions about the direction of future safety and security, leading us at this pivotal time in history. America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations will not use their economic and military might to advance their goals – particularly against what they perceive as weak, incompetent and disorganized Western democracies. We are reminded that national security is and always will be paramount, even if its importance seems to diminish in times of calm.”
On social networks:
“A modest and common-sense step would be for social media companies to give platform users more control over what they see and how it is presented, leveraging existing tools and features, like alternative feed algorithm settings that some are offering today. I believe many users (not just parents) would appreciate a greater ability to more carefully organize their feeds; for example, prioritizing educational content for their children. “
An update on the First Republic agreement:
“Acquiring a large company is very complex. People tend to focus on financial and economic results, which is reasonable. And in the case of the First Republic, the numbers look pretty good. We recorded an accounting A gain of 3 billion dollars on the purchase, and we told the world that we planned to add more than 500 million dollars in profits per year, which we now estimate will be closer to 2 billion dollars.
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