P4Capital is beginning a series of Podcasts and interviews featuring our executive team, who will be discussing pressing concerns for the Canadian financial industry.
Today is our first round table discussion. The topic – JP Morgan.
Hello everyone and good morning. Coming to you from the heart of chilly Downtown Toronto. We are the P4Capital group.
We are beginning a series of Podcasts and interviews featuring our executive team, who will be discussing pressing concerns for the Canadian financial industry.
Today is our first round table discussion – the topic, JP Morgan.
Jim: My name is Jim Carlson, I’m a partner in the firm and have been interested in working the Capital Market scene for the last 30 years
Archana: Hi, my name is Archana Ravinder. I’m an Account Manager with P4Capital.
Jeremy: Hi Jeremy Paczuski here, Client Executive with P4Capital
Shaheerah: My name is Shaheerah Kayani, I’m an Associate Recruiter with P4Capital.
Jim: The topic that we’re discussing today is why has JP Morgan leaped ahead in profits, and it is our belief that they were the first vested into Big Data, which they made an open market statement two years ago. Investing heavily from legacy technology into Hadoop which allowed them access into real time data and databases, and obviously the fruits of that investment are starting to pay off.
Archana: One of the things that JP Morgan has been sort of keeping a tab on, is the different forces that have been shaping the banking landscape, and how they can deliver value to their customers.
Jeremy: I suspect that part of their advantages here is how they’ve been able to monitor risk and control the middle office. Specifically, if you look at the big hits that have taken place to some of their competitors over the last couple years. In terms of rogue traders like Nick Leeson at Barings Bank or the fellow at UBS in London where they were able to accumulate 1-2 billion dollars in rogue trades, that will obviously have a really bad effect on your quarterly profits. So JP Morgan has done a good job of controlling that area.
Archana: Taking a cue from what Jeremy just said, JP Morgan has actually been analysing the data. They’ve put big data to good use, monitoring these trade anomalies that they’ve seen and again at the end of the day it’s all about delivering value to their customers. And they’ve been keeping a close tab on that.
Jim: And carrying on with what both Jeremy and Archana were mentioning, ideally when you’re trading your need for accurate information faster than any competitors will give you a huge step up. In effect what we’re saying is that Morgan looks at risk and anomalies and gets access to that information. And since everyone is in the low latency game now, the low latency is actually access to effective data, and Morgan has it, and has leapt forward ahead of their competitors.
Shaheerah: This has also helped JP Morgan be very innovative. So for example they’ve introduced a lot of new investment products, just last year they introduced the US dollar clearing Asia direct solution, as well as the cost currency automated clearing house, and the security services direct custody and clearing platform in Hong Kong.
Jim: And with that, that innovativeness that Sharheerah just brought to the table, they’re taking market lead positions once again. So they got risk analysis anomalies quickly noted, and now they’re adding innovative market leading positions throughout the globe.
Jeremy: Presumably the big data initiative has given them access to all kinds of sources of data which they’ve been able to capitalize on by writing better algorithms. It’s all about speed to market like Jim said.
Archana: Another interesting thing that JP Morgan has actually been doing is sometime in 2013 there was a mass exodus of senior executives from JP Morgan. For a bank to turn around from a situation like that and to be declared the top performing investment bank speaks volumes. So, one of the thing they’ve done on the recruitment side is the technology team at JP Morgan actually comes from wide industries, so for example the chief security officer is an ex US airforce commander, so just the business areas from which the senior management comes from brings a lot of cross pollination of ideas and expertise as well.
Jim: Effectively, they noted and through our contacts here at P4Capital, they drew upon Toronto experts as well, is the fundamental shift that’s gone on in the world is moving your data from an OLTP world into an real-time world. Morgan was first on the market, they used experts from outside the industry so they weren’t purely recycling people who worked on Legacy platforms, who brought in innovating thought leaderships. And the results are strong, dramatically!
Shaheerah: So while JP Morgan has done well, it’s interesting to note that FICC which is Fixed Income Instruments Currencies and Commodities, trading has actually been on a decline since the 2008 financial crisis. This is due to the collapse of interest rates. So now banks are required to have more capital and have been discouraged from risky trading and this has a negative impact on investment returns. It has actually been projected that the total full year FICC revenue from the top ten investment banks worldwide will actually drop 9% this year, so down to 67.4 billion dollars.
Jeremy: Also interesting to note is that banking used to be the default go to place for top talent out of business schools. People who weren’t really sure what they wanted to do, a lot of them found their way into banking due to aggressive recruiting campaigns, on campus recruiting from the banks, but they’ve been facing a lot more competition out of Silicon Valley recently. It’s been shown you can make a lot of money over there as compared to Wall Street working quite a few less hours.
Archana: High frequency trading and the technology changes that are happening they’ve been attracting a lot of new MBA Grads. And JP Morgan, in trying to combat all that’s happening in the technology market space, they’ve been trying to Google-ize their environment, creating all sorts of rooms and creating a more hip work culture, just in order to attract these young Grads that can be groomed to be future managers within JP Morgan and its scheme of things.
Jeremy: Well, speaking as someone whose been to the head office of JP Morgan at 60 Wall Street. That would be quite the change. That would be something I’d really like to see
That was the P4Capital group in our first round table discussion featuring JP Morgan. Stay tuned for our next round table in a few weeks. P4Capital, allowing financial institutions to reach digital velocity quickly. Want to know more? Check out our website at http://www.planet4it.com
. See you next time.