More cloud and less mainframe at JPMorgan

JPMorgan Chase’s technology spending priorities for the year include investments in data centers, cloud computing, consumer digital experience, and downsizing on mainframe resources.

US bank JPMorgan Chase spent $2 billion last year modernizing and expanding its data centers, even as the multinational finance company continues to move data and applications to cloud platforms operated by AWS, Google and Microsoft. The $2 billion represents part of the company’s total annual spending on technology, which came to more than $12 billion last year, according to details shared in the bank’s fourth-quarter earnings presentation. Quarter and full year 2021. For the current year, the company plans to increase its technology spending to about $15 billion. IT priorities in 2022 will be consistent with previous years and will include increases in cloud capabilities, data centers, digital consumer experience, and data and analytics.

“We spent $2 billion on completely new data centers, which have all the cloud capabilities that you can get in private data centers. And we’re still using the old data centers,” Jimmy said. Dimon, Chairman and CEO of JPMorgan Chase, on a conference call with financial analysts in January. Damon added that most applications and data hosted in state-of-the-art data centers qualify for cloud computing. In the meantime, the company continues to expand its multicloud footprint. “We run a whole bunch of critical software, which we haven’t disclosed, on AWS, and we’re working with Google and Microsoft to run some of that software in the cloud, because we want to have multi-cloud capabilities,” Ms. He added that between 30 and 50 percent of the company’s applications and data will be moved this year to cloud platforms.

JP Morgan Chase Data Center Roadmap. (credit: JPMorgan Chase)

“This material is absolutely absolutely valuable… If you sit in this room and look at the power of the cloud and big data on risk, fraud, marketing, capabilities, offerings, customer satisfaction, error handling, complaints, and prospecting — it’s exceptional.” Mr. Dimon cited fraud prevention as one area that was being improved by the company’s investments in technology. “For example, with all the scams and all the ransomware, our fraud costs went down this year. There’s a reason for that. Because we’ve deployed huge potential in those areas.”

Spending and Technology Priorities

About half of JPMorgan Chase’s annual technology spending falls under the investments category, “or as we sometimes call it, ‘changing bank spending’,” said Jeremy Barnum, JPMorgan Chase’s chief financial officer. He added that the investment category includes regulatory projects, modernization efforts, and cancellations. Technical Debt Global technology initiatives define cloud migration, modernization of existing infrastructure and infrastructure, investment in enterprise data strategy, attracting and acquiring top talent with modern skills and optimizing the operating model for the company’s products.Based on all of this, we continue to focus on cybersecurity to protect society, said Barnum. our customers and consumers, as well as maintaining a healthy control environment.”

Barnum said the other half of JPMorgan Chase’s spending on technology is dedicated to driving innovation across the company’s business and into its customer-oriented products. For example, the company has worked to digitize existing product offerings with projects such as consumer lending app Chase MyHome, and launched cloud-native digital banking capabilities with its recent launch of Chase UK. On the wholesale front, the company continued the development of its Execute trading platform and launched the Onyx blockchain-based platform. “We believe it is critical to identify and resolve customer weaknesses and improve the user experience, and we are addressing the issue through a combination of building, partnership and procurement,” Barnum said.

Will these technology investments be profitable?

During the analyst conference call, JPMorgan Chase executives discussed the enduring challenge of linking technology investments directly to financial performance and the ability to attach a tangible income result to these investments. During the question-and-answer portion of the conference call, Jim Mitchell, an analyst at Seaport Research Partners, asked what the bank sees in terms of a return on its investment, and when it should expect that return. The CFO explained that ROI is easier to measure in an area like credit card marketing, “where every dollar invested in card marketing is part of a very complex set of data-driven and highly quantifiable decisions, to ensure that all of those decisions are profitable.”

At the other end of investment continuity, Barnum said, the technology used is being updated. “These things are the right things – obviously we have to do. If we don’t, we will be clumsy, inefficient and crippled in the future when we try to compete. And it is impossible to prove, at least in strict financial sense, that there is a tangible return on investment from this, But we know it’s absolutely mandatory.”

Fewer mainframes

Regarding the company’s revenue outlook, Mr. Barnum said: “We certainly assume that many of the investments we’re making now that we’ve made over the past two years will produce the revenue that we’re expecting over this time horizon.” . “But a lot of what we do is not like that. In a sense, these are really the most important investments, because these are the hardest decisions to make.” In response to another question about measuring the savings associated with moving a core business to the cloud, CEO Dimon shared metrics related to JPMorgan Chase’s retail credit card business. “The card runs on a mainframe, which is great,” Damon said. The mainframe platform is efficient and cost-effective and manages over 60 million accounts. “It has been modernized for years. But it is a mainframe system in the old data center. When it is modernized and moved to the cloud, the savings in management are made and marginalized. [le mainframe] “It’s going to be $30 million or $40 million a year,” Dimon said.

“But that’s not why we’re doing this,” Damon added. The real value lies not in the immediate cost savings, but in the ability to take advantage of data faster and make it available to other systems. “…once this data is moved to the cloud, the databases used to run systems for managing risk, marketing, fraud, real-time bidding, etc. are within the reach of a massive amount of machine learning,” he said. Another advantage of moving the credit card system to the cloud is that it is an accessible platform for developers. “When you touch a central system, you have to be a little careful when you go in there and make changes to it,” Damon explained. “I used to modify this mainframe computer system four times a year, [pour] Big releases and stuff like that…. Today you can upgrade a small part of it every week, every day. This is why it is important to do so. This is also why it is difficult to determine the benefits and costs. “

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