Investing in Our Future

As one of the largest, most systemically important financial institutions in the world, we are not only a benchmark for safety and soundness, we have a responsibility to play a leadership role in advancing the industry and its business practices. To meet the evolving needs of our customers and clients, as well as the global financial system more broadly, we are committed to continually developing new solutions while maintaining a robust and secure infrastructure.

As the firm’s Chief Operating Officer, I am responsible for many critical functions across the firm, including Treasury, the Chief Investment Office, Global Technology, Operations, Corporate Strategy, Global Real Estate, Oversight & Control, Compliance, Global Security & Military Affairs and Regulatory Affairs, among others. The Chief Operating Office (COO) drives progress on initiatives that are vital to the firm’s long-term success.

Creating new tools to manage our balance sheet, liquidity and interest rate risk

Treasury and the Chief Investment Office are central to managing the firm’s balance sheet. Together with our lines of business, we achieved a tremendous amount in 2015; most notably, we overdelivered on our strategic efforts to decrease non-operating deposits and meaningfully reduce the firm’s GSIB capital surcharge from 4.5% to an estimated 3.5% – with no material impact to our firm or our clients and, importantly, securing a new grounding point for the firm.

We devoted significant attention to studying our current business mix to respond strategically to evolving regulatory requirements and to maximize shareholder value. We introduced a comprehensive firmwide balance sheet framework designed to objectively analyze and consider our business activities relative to some 20 constraints, ranging from liquidity and regulatory capital to GSIB and CCAR. This framework now is being leveraged in strategic review and planning sessions across the firm.

2015 featured the first rate hike by the Federal Reserve in nearly a decade, an event for which we have been preparing; and, while the future is never certain, we are increasingly smarter and better prepared to manage against whatever scenario plays out. We expanded our capacity to run interest rate scenarios and further industrialized our processes and risk engines, securing the foundation of our risk management practices. In a continuing effort to evolve our deposit pricing framework, we completed a series of granular reviews of our deposit models and recalibrated to better capture interest rate sensitivities and potential migration outcomes as rates normalize.

In 2015, we implemented our firmwide intraday liquidity framework, a program that was launched last year. We have substantially improved our ability to manage real-time liquidity risk and reduced the amount of intraday liquidity facilities by nearly $1 trillion. We can now, quite literally with the click of a button, view, monitor and manage in real time cash payments coming in or leaving the firm. More broadly, we remain compliant with all regulatory required and internally measured liquidity risk scenarios, with appropriately conservative liquidity buffers.

We are a technology company

Technology is the lifeblood of our organization, and it drives the delivery of the secure products, platforms and services our customers and clients value and trust. We serve nearly 40 million digital customers and process $1 trillion in merchant transactions annually. Each day, we process $5 trillion of payments, as well as trade and settle $1.5 trillion of securities. We see technology as an essential core competency and a key differentiator to drive future growth in all of our businesses.

Last year, I outlined our major technology investment areas in support of the firm’s strategy; since then, these strategic priorities have become even more embedded into our technology DNA and are the focus of our investment spend. In 2015, approximately 30% of the firm’s more than $9 billion technology budget went toward new investment. As we continue to drive efficiency and prioritize innovation, we intend to shift even more dollars from "run the bank" operational activities to "change the bank" investments.

Protecting the firm

In the first eight months of 2015, the Federal Bureau of Investigation reported a 270% increase in fraudulent wire transfers as a result of targeted business email compromise scams. At JPMorgan Chase, we typically identify over 200 million malicious emails each month. To defend against these and other types of attacks, we continue to make significant investments in building a world-class cybersecurity operation. Globally, thousands of employees are focused on cybersecurity – working across the firm and with many partners to maintain our defenses and enhance our resilience to threats. We continue to uplift standards and controls for our third-party providers, as well as for systems access across the firm. Three global Security Operations Centers monitor our systems 24 hours a day, seven days a week, in a true "follow the sun" model. We are embracing a proactive, intelligence-driven approach to detecting and preventing malicious activity as early as possible, ideally before the firm is even targeted. We also are taking a prominent role in the industry by leading a set of simulated cybersecurity exercises with our peer banks and other payment platforms – to ensure that we, and the broader industry, are increasingly prepared for new cyberattack scenarios.

Innovation successes

We strive to be at the forefront of our industry and invest tremendous resources in new technologies. Here are a few examples of the impact of innovation in our major technology investment areas:


Digital payments

We are leading the future of payments. Chase QuickPay® offers convenient and nimble person-to-person payment solutions for consumers. In addition, this year, we will launch Chase PaySM to create a new digital wallet and mobile payment experience in partnership with many of the largest retail merchants in the country. For corporate clients, J.P. Morgan ACCESS® now provides the ability to execute international payments in more than 120 currencies any time of the day through multiple channels.

Digital platforms

We are in the process of rolling out a brand new platform that will enable us to increase the pace of innovation and deliver simple, personalized customer experiences. We continue to improve our industry-leading Chase Mobile® app with new features and functionality to allow our customers to bank with us anytime and from anywhere. We have continued to enhance our award-winning J.P. Morgan Markets® platform to differentiate our Corporate & Investment Bank – for example, trading volume on the eXecute foreign exchange (FX) trading app increased by more than 80% last year, helping the firm grow its share of the electronic FX market.

Digitally enabled branches

Our new Chase ATMs will be able to perform roughly 90% of teller transactions and are being rolled out across our branch network. They will include innovations such as cardless authentication at an ATM using the Chase Mobile app – that means more transaction flexibility and simpler customer experiences that work seamlessly with our other digital channels.


Our customers, clients and communities – as well as the firm – significantly benefit from big data technologies and improved data management practices across our businesses.

Enabling customers and clients

Last year, in our Custody and Fund Services business, we introduced NAVExplain, an industry-first solution that puts key insights about underlying fund activity and asset holdings at the fingertips of fund accountants. This solution reduces errors and expense, improves productivity and provides a far superior client experience.

Identifying new business opportunities

Innovative analytics capabilities are helping us uncover new business opportunities. For example, we are analyzing broad sets of publicly available and proprietary data to better predict the financing needs of our clients. In Commercial Banking, our sales teams have begun using a new data-driven tool to more effectively engage prospective clients – we expect this tool to identify more than 10,000 new prospects in the United States.

Expert insights for the public good

Our unique proprietary data, expertise and market access position the firm to help solve issues in the broader economy. The JPMorgan Chase Institute offers decision makers across the public and private sectors access to the firm’s real-time data and analytics to tackle economic problems, from the effect of income and consumer spending volatility on individual Americans to the impact of local consumer trends on neighborhoods.


Over the last few years, we have built an efficient private cloud environment within our data centers to run the firm’s diverse portfolio of applications. Today, approximately 90% of new infrastructure demand is hosted within our cloud environment – streamlining support, improving utilization and accelerating delivery. To further drive value for our businesses, we conducted an initial public cloud pilot and identified several target use cases to complement our private cloud. One use case addresses business- driven fluctuations in computing demand with a virtually limitless supply of infrastructure made available when we need it, reducing long-term capital investments. To lower storage costs, we are evaluating the potential to store infrequently accessed data securely in the cloud. Our strategic vision is to embrace a hybrid cloud model in which internal and external resources are made available on demand. We are partnering with leading providers to create a world-class environment without compromising our standards for security.


We are bringing the look, feel and experience of consumer technology into the enterprise environment to transform the way our 235,000 employees work. More than 100,000 employees now use their personal mobile devices to securely access business applications, offering them the freedom and flexibility to be productive on the go. In addition, investments in real-time collaboration tools allow teams to communicate seamlessly across the globe. For example, this year, we engaged in more than 90 million minutes of video conferencing across 125,000 video-enabled endpoints – making JPMorgan Chase one of the largest users of enterprise video collaboration in the world.


Providing the optimal environment for our developers to concentrate on creating new products and solutions is a priority. We are defining best-in-class development practices for the thousands of men and women writing code at the firm – to accelerate delivery, improve quality and drive efficiency. We also have equipped our high-performance development environments with industry-leading capabilities, including continuous integration, automated deployment and security scanning. The vitality of our developer community has never been so important to ensuring our future.

How we innovate

We are firmly committed to developing our 40,000 technologists around the world. In 2015, our technology workforce consumed more than 1 million hours of training to further advance their technical, management, leadership and business skills. We recognize that sustained technology leadership comes from a robust, diverse talent pipeline. To build this pipeline, we engage extensively with high school and college students through oncampus visits, as well as by hosting coding and design challenges at our sites. In 2015, we selected 650 technology analysts to join our two-year program from an applicant pool of more than 7,000. The program starts with a six-week boot camp, with nearly 250 hours of training, and is augmented with 65 additional hours over the next two years.

We also partner with some of the brightest minds in the industry on developing solutions. In 2015, we engaged with more than 300 technology startups and piloted over 100 technologies, 50% of which now are in production. Many potential solutions will fail, but we recognize the value of experimentation and know that even if only a handful are successful, we can dramatically change the way we do business for the better. These relationships often develop into strategic partnerships, and, where we think it makes sense, we are making capital investments in these companies to drive our mutual success. An example of this is our recent investment in a new blockchain startup, where we are partnering to explore opportunities for distributed ledger technology. We are developing solutions for multiple blockchain use cases, including single-name credit default swap settlement and internal network payments. We are founding members of the open source Hyperledger Project, collaborating across the industry to enhance distributed ledger capabilities globally.

We continue to do business in smarter ways

In 2015, we realized savings by effectively leveraging, streamlining and optimizing our platforms, resources and real estate assets. Doing business in smarter ways often means simplifying the environment so that we can focus our attention and spending on new investments.

Some of our key initiatives to increase efficiencies and reduce costs include:

  • Location strategy: We are driving the co-location of our technology professionals into 13 strategic hubs to optimize our real estate footprint and reduce costs. The hubs are adopting cutting-edge, open workspaces that resemble Silicon Valley, equipped with state-of-the-art technology to promote collaboration and creativity, resulting in our firm being rated among the top employers of choice for technology talent in financial services.
  • Vendor rationalization: We are progressing our preferred vendor program across technology – last year, we reduced the number of vendors we use for core technology project services by 40%.
  • Legacy applications: We simplified our technology environment and decreased operational risk through our Kill the Tail initiative to reduce applications across the firm. In 2015, we decommissioned 13% of our legacy applications and expect to decrease this population by a total of 25% by the end of 2018.
  • Stability: In 2015, we continued to achieve more resilient and stable applications, resulting in a 65% reduction of technology production incidents over the last two years.

Our control environment remains paramount

Our businesses function independently but with greater connectivity, transparency and consistency than ever before. The significant improvements to our control environment over the past three years have become part of our everyday operating model. By the end of April, we will have completed work on all 19 enterprise-wide programs established to tackle our top control issues and integrated them into standard business operations. We are working hard to deliver on milestones to get more of our outstanding consent orders lifted by our regulators.

The Risk & Control Self-Assessment (RCSA) program, a key component of the firm’s Operational Risk Management Framework, is completing its third cycle and has become fundamental to how our businesses identify and manage operational risks and assess the adequacy of their controls. This year, we integrated conduct risk measures into the RCSA, taking a disciplined approach to how we build and evaluate controls around employee conduct. During 2016, we will begin to replace the current platform used to support operational risk management with a new system called FORCE. FORCE will increase operational efficiency by driving a simpler and more effective user experience, as well as introducing a more agile technology infrastructure.

In Compliance, we enhanced our surveillance to detect potential employee, client or counterparty market misconduct by implementing e-communications surveillance in seven languages across 39 communications channels. We also extended our transaction surveillance across all asset classes in our Markets businesses. We broadened our strategic Anti-Money Laundering transaction monitoring platform to transactions in cash, checks, wires, ACH and prepaid cards across 35 booking locations globally, enabling us to decommission 12 legacy monitoring tools and systems.

We will continue to invest in our people and our culture

The COO drove the global initiative to establish a Culture and Conduct program to reinforce the firm’s Business Principles across all businesses and functions. We put it front and center on the agenda and met with more than 16,000 employees to hear firsthand what drives their behavior and to better understand how to motivate people to do the right thing. We implemented a comprehensive governance structure and reporting that will allow us to monitor progress against action plans. Our efforts are reviewed at all levels of the organization, up to our Board of Directors’ Compensation & Management Development Committee, and will incorporate the development of additional metrics, which will reflect, over time and in aggregate, trends in the state of our firm’s culture.

We are deeply focused on recruiting top talent and training our next generation of leaders across the firm. In addition to our efforts to source tomorrow’s technologists, our veterans’ recruitment program continue to bring servicemen and women with unique leadership skills and experience – for example, in cybersecurity – to the private sector. The more than 10,000 veterans hired by the firm have made a demonstrable impact on our culture. Our Business Principles laid the foundation for the firm’s new Leadership Edge training program to develop outstanding leaders and managers. This year, senior leaders across the COO organization were major participants and will be going forward. We will continue to reinforce a strong sense of personal accountability and ownership for everything we do among all employees in all locations and at all levels.

Looking ahead

We are at the forefront of change in the industry, and we continue to grow our core and strategic capabilities to sustain our competitiveness. Our sophisticated interest rate and liquidity risk management frameworks prepare us for a range of market scenarios and ongoing regulatory changes. Our focus on technology, be it developing innovative solutions, capitalizing on big data or investing in cyber defenses, underscores the firm’s commitment to leadership and excellence and to being the most effective provider of financial services across all categories. We continue to invest in our most important asset, our people. We look forward to serving the needs of the next as well as the current generation of customers, clients and employees. We will continue to advance and protect the firm’s position as a worldclass financial institution – in a culture rooted in both ingenuity and integrity.

Matt Zames, Chief Operating Officer signature

Matt Zames
Chief Operating Officer