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Why JPMC and Goldman Are Betting On Automation

It promises lower costs and fewer errors

Recently, two giants of the financial services sector — JPMorgan Chase & Co. and Goldman Sachs — spoke publicly about the bets they’ve made on automation, and how their investments are saving them money and making them more productive.

  1. JPMorgan Chase & Co.: Bloomberg recently reported on the bank’s new commercial banking automation initiative, Contract Intelligence, or COIN.

    The bank created automation software to review financial statements and guide commercial loan approval decisions, which is one of over 2,000 innovation projects funded through its $9 billion technology budget.

    Results: COIN will replace 360,000 hours per week of lawyer and loan officer time, resulting in savings of between 7,200 and 9,000 highly-skilled FTEs.

  2. Goldman Sachs: At Harvard’s Institute for Applied Computational Science, Goldman Sach’s incoming CFO explained the bank’s firm-wide approach to automation.

    He says they identified 146 steps in any initial public offering of stock that are “begging to be automated,” and then hired the right talent — approximately one third of Goldman’s total staff, or 9,000 employees, are computer engineers.

    Results: The bank replaced 600 traders on its US cash equities desk with automation trading programs supported by 200 computer engineers. It also found a consistent trend that four traders can be replaced by one computer engineer with automating currency trading.

How Automation is Helping Financial Services

More and more banks are recognizing the potential of upping productivity, saving money, mitigating risk, and improving customer service that automation provides. Although not all firms will have the investment backing that Goldman and JP Morgan do, many are already reaping the benefits in a number of ways (see chart 1), especially to replace expensive and slow manual processing tasks with software that yields fewer errors and costs less money.


Chart 1: How automation helps with business objectives  Source: CEB analysis


 

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