AI at JPMorganChase & more

Last week, the Financial Times reported that “JPMorganChase has begun rolling out a generative artificial intelligence product" within its asset and wealth management business.

• JPMorganChase said its own version of OpenAI’s ChatGPT can do the work of a research analyst.

• The product, called the LLM Suite, can help them with writing, idea generation and summarizing documents through access to third-party models.

• About 50,000 employees have access to the system.

Separately, in JPMorganChase’s annual shareholder letter (April 2024), chief executive Jamie Dimon said:

• “We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk — and they are increasingly driving real business value across our businesses and functions. We're also exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity. 

• "While we are investing more money in our AI capabilities, many of these projects pay for themselves. Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition. It may reduce certain job categories or roles, but it may create others as well."

Finally, the study “Financial Statement Analysis with Large Language Models” (University of Chicago, May 2024) found that:

• AI outperforms financial analysts in predicting the earnings of publicly traded companies. AI was correct 60.35% of the time, human analysts were correct 52.71% of the time.

• Valeri V. Nikolaev, professor of accounting, and co-author of  the study, said “It’s very important to have a human in the loop, of course, but AI has the potential to be more than a ‘support tool’ aiding financial analysts … [large language models, or LLMs] could be “more centrally located in the decision-making process, taking the driver’s seat, and the human is looking over the shoulder of the AI model.”

OUR TAKE

• As major financial institutions like JPMorganChase expand their use of artificial intelligence, adapting to an evolving AI regulatory environment will be crucial to managing business risk.

• Organizations adopting AI technologies must also address the challenges of 1) mitigating bias, which may unintentionally be embedded in training data or algorithm design and 2) ensuring the quality and integrity of data.

• The University of Chicago study suggests that financial analysis roles will evolve substantially, with human analysts potentially transitioning from primary decision-makers to supervisors or auditors of AI-generated analyses.