JP Morgan is leveraging AI-initiatives to reinforcing its market position

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Positioned as the world’s biggest investment bank in revenue terms, JP Morgan is on a technological innovation track to maintain its place in the competitive financial industry. The bank is investing heavily on business improvisations through Artificial Intelligence (AI). The company has spent around US$ 3 billion in technology related to application of machine learning and robotics to increase operational efficiency. 

The bank with its new innovative AI programs has brought revolutionary automation in the trading methods and legal working helping to save cost and processing time. The bank has developed its private cloud platform known as Gaia to facilitate the innovation developers with the appropriate infrastructure and application services. The bank is also using AI technology in its internal operations by creating bot and program called X-connect for its employees. The bots primarily aimed at performing simple internal functions such as response to IT requests, and software access grant is executing work of approximately 140 people and is expected to get the bank a saving of US$ 30 million in the year 2017. X-Connect is the other AI driven program for employees that scrutinizes E- mails to locate colleagues having close relationship with potential customers and help the employees to get introduced to the customers through them.

JP Morgan Improvising operational performance through COIN

Through its contract intelligence software, COIN, the loan segment of JP Morgan has increased its operational efficiency. The software enables the reading and interpretation of loan servicing agreements within seconds, which otherwise demanded several thousand work hours of the loan officers and lawyers. According to the designers of COIN, the number of loan servicing flaws every year, most of which occurred due to human error in interpretation of the new wholesale contracts.

Through the application of COIN, JP Morgan has tremendously reduced on the loan servicing errors resulting in increased efficiency and performance. The learning machine has decreased the completion time of the processing of loans with drastic reduction in the reading and interpretation of contracts. JP Morgan is planning to expand the deployment of COIN in other complicated legal filing procedures such as agreements related to custody and credit- default swaps to enhance the overall operating performance. JP Morgan is expected to further extend the applicability of COIN in identifying relationships and patterns by analyzing corporate interactions and interpretation of regulations.

LOXM to increase cost-effectiveness of JP Morgan

LOXM is one of its kind innovations by JP Morgan to apply AI technology in executing real-time trades unlike the existing ones in the market which can be applied for allocations after trade. Technologically advanced with the “Deep Reinforcement Learning” technique, LOXM is equipped with billions of historic trading scenarios (both simulated and real) enabling it to execute real-time trade efficiently. Based on these past trading experiences, LOXM ensures the faster execution of the client orders at the most favorable price and also evading market price fluctuation while offloading large equity stakes.

After the successful testing of LOXM in Europe since the first quarter of 2017, JP Morgan plans to launch the technology in US and Asian operations of the bank by the last quarter of 2017. The Europe trial of the AI program has proved that LOXM is much effective method of trading compared to the traditional methods (manual or automated) and has also contributed to the savings.  Currently the capabilities of LOXM are restricted to deciding on how to trade rather than what to trade. However, the bank intends to expand its application from client order execution to client management.  This means the AI program will also be trained to completely acquaint itself with client’s trading behavior and responses while trade execution.  This customization will help bank to attain effective service personalization at a massive scale.

To know more and get deeper understanding of AI in banking industry, click here.