JPMorgan Chase will spend more than $12 billion on technology in 2022, contributing to an eight per cent rise in expenses that could hurt the bank’s profitability targets.
Reporting fourth quarter results, JPMorgan set out technology spending plans that will see it use “microservices architecture, cloud and modern engineering practices to accelerate software
development”. The bank is also betting big on AI and machine learning to get more value out of its data and stressing its commitment to cybersecurity.
In addition, it plans to continue making acquisitions, following up on recent deals to buy OpenInvest, Nutmeg and a 75% stake in VW Payments.
With competition for talent fierce, JPMorgan also says it plans to “redesign” the way it attracts and retains the best technology people.
James Shanahan, an analyst with Edward Jones, told the Financial Times that the $12 billion technology spending is an “astonishing number” that “probably blows away the cumulative dollar value of investment of all the fintechs in the world that are trying to disrupt them”.
The bank warned that its increased expenses will probably hit its return on tangible capital equity, prompting its share price to dip and Wells Fargo analyst Mike Mayo to downgrade its stock.
