CEO, Asset and Wealth Management, J.P. Morgan
A bank can’t just wait to see what disruptions might come about and what impact they will have — it has to anticipate them.
That’s the driving force behind J.P. Morgan’s exercise known as “red teaming,” where employees put themselves in the shoes of a startup attempting to gain a foothold in the market, said Mary Callahan Erdoes, the CEO of its asset and wealth management business.
By forcing colleagues at JPMorgan Chase's investment bank into a different role, Erdoes said they gain more than just an understanding of what to expect from upstart challengers. It also creates more open dialogue, which can be shared with clients experiencing disruption of their own.
“The best part of being a banker is being able to learn from each and every client and apply the collective lessons over our decades of experience to each new situation,” she said.
In her ongoing quest for continuous improvement, Erdoes — once again American Banker's Most Powerful Woman in Finance — continues to help the business she runs reach new heights. Last year, her unit posted record revenue and net income as client assets hit $2.8 trillion, an all-time high.
The growth is coming at a time of profound change in the wealth management sector.
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Echoing others in the financial services industry, Erdoes said that the biggest change is the demand for “digitalizing everything we do to allow clients to interact with us where and when they want.”
She cited a study from Greenwich Associates that found 76% of companies consider digital capabilities to be highly or very important in selecting a banking partner, and an Ernst & Young survey in which 60% of respondents said digital will be their primary channel for getting investment advice in three years.
“Many people once thought that investing was really only accessible to those with substantial wealth,” said Erdoes, who has been in her current role since 2009. “But investing is much more accessible today. Investing has become a bigger part of the national conversation, and plays a bigger role in more and more people’s lives.”
In the past 12 months, parent company JPMorgan Chase has staked out an aggressive strategy as part of its “digital everything” model, rolling out new initiatives including You Invest, a digital investing app with free trading; a digital portfolio insights tool for financial advisers; and Finn by Chase, a mobile-only banking service.
Still, established banks engaging in internal disruption practices should expect some pushback, Erdoes said.
One impediment that isn’t often brought up by champions of disruption is the tendency of internal transformation efforts to run up against management fiefdoms and employee expectations.
“It’s just human nature,” she said. “But everyone has to learn their way through it.”
JPMorgan Chase has always made significant investments in technology for its employees and clients, Erdoes added.
“In fact, we have more 50,000 technologists, 31,000 of which are in development and engineering roles, making us arguably one of the largest technology companies in the world,” she said.
Technology also continues to change the practice of investment management.
The fundamentals of managing money still require having the best investment minds, but they need sophisticated technology to do their jobs well, she said. “This enables more comprehensive analysis of enormous data sets, faster and more optimal execution in portfolios, and seamless delivery of all that we do in both human and digital form.”
Technical literacy is now expected of even those who have worked within the traditional spheres of investment management, she noted. Her asset and wealth management business is augmenting its current processes with the application of data analytics.
“We believe that when we combine data and deep learning with our human talent, we can produce superhuman results,” Erdoes said.
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