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Driving Diversity, Equity, and Inclusion
JPMorgan Chase is using the power of its supply chain and lowering the barriers to opportunity for Black, Hispanic, and Latino suppliers.
Increasing Diverse Supplier Spend by US$6 billion
Above and beyond its US$30 billion commitment, JPMorgan Chase is developing creative approaches to scaling its support for supplier diversity. First, the firm is working with its top suppliers to drive a combined increase in spend with diverse businesses by more than US$6 billion, with US$1.2 billion going to Black, Hispanic and Latino-owned companies. While the goal is to reach these spend increases over the next three years, the larger purpose is to have other corporations develop sustainable diversity programs that will generate new revenue for diverse businesses for decades into the future.
Meeting a mission to support diversity, equity and inclusion will involve forging new paths and encouraging shifts in the overall culture of the business community. But Eric Smith and his team understand that one company can’t drive impact alone. It takes a commitment from large and small companies across all industries.
Today, if a supplier wants to do business with JPMorgan Chase, it must demonstrate that it has established a diversity, equity and inclusion infrastructure and culture. According to Eric, that means engaging in active conversations with existing suppliers and building diversity equity and inclusion into the firm’s minimum control requirements. For example, JPMorgan Chase now asks its suppliers annual diversity, equity, and inclusion questions to ensure that their diversity programmes align to the firm’s values.
Diversity is now considered a finding on the firm’s overall annual assessment that may require remediation and conversation. “Our suppliers need to embrace the need for diversity”, Eric tells me. “We conduct business with suppliers that have similar values, that have a similar culture, that have a similar drive for inclusion.”
Cyber-Readiness for Black and Hispanic Suppliers
Supplier spend isn’t the only aspect of JPMorgan Chase’s push for greater inclusion. Diverse business owners often need other forms of support. For instance, they may not have a clear picture of gaps in their technology infrastructure which could potentially disqualify them for work with financial institutions.
Additionally, the COVID-19 Pandemic highlighted new vulnerabilities that emerged from suppliers having to work remotely. “The pandemic revealed new cybersecurity risks to the firm”, Eric explains. “We realised that many of our suppliers, when forced to send their employees home, weren’t ready to execute their resiliency plans. We saw suppliers being impacted by ransomware. And that reshaped the minimum control requirements we have around cybersecurity."
To assist diverse suppliers in getting their businesses secure and cyber-ready for financial industry clients, JPMorgan Chase recently partnered with TruSight, a risk management utility co-founded by JPMorgan Chase, American Express, Bank of America, Bank of New York Mellon and Wells Fargo. The firm is using this utility to provide Black- and Hispanic-owned companies with a detailed view of their cybersecurity status. TruSight reviews several best-practice areas across a company’s operation, collects observations about their controls environment and generates a report or assessment of their level of security.
JPMorgan Chase’s TruSight partnership programme aims to eliminate a common barrier to opportunity with financial industry firms by making cyber-readiness more accessible for diverse suppliers. So far, TruSight has provided 25 diverse suppliers in JPMorgan Chase’s pilot programme with complimentary assessments. These assessments provide each diverse supplier with direct feedback on which cybersecurity controls they must increase to improve their industry positioning.
After these suppliers receive their TruSight assessment results, they have an opportunity to work with several consulting organisations, including Deloitte, Ernst & Young, and Protiviti—to navigate steps towards remediation. This is a service they can receive free-of-charge. Remediation complete, diverse suppliers are more prepared to take contract opportunities with JPMorgan Chase as well as other financial institutions.
However, this programme provides additional benefits to participants that go beyond generating reports and remediation plans. It surrounds the supplier with a network of new relationships—both with other diverse business owners, and also with all of TruSight’s founding banks. Throughout the program, cohort members are given the opportunity to present their capabilities to several financial institutions they can potentially work with.
Though JPMorgan Chase’s TruSight cybersecurity programme may expand in the future, Eric’s division is currently set on championing its initial cohort of twenty-five Black and Hispanic suppliers. Sixty percent of the way through the first set of assessments, JPMorgan Chase is definitely seeing the results it expected: some suppliers are well-positioned to start working with financial institutions; others may benefit from working with a top consulting firm.
Breaking Down Barriers to Inclusion
Access to capital is a common challenge faced by diverse businesses, so meeting industry requirements like cyber security, insurance, and bonding is often cost-prohibitive. Satisfying these requirements can cost a typical small business over US$100,000, creating another barrier to entry into the financial services industry.
To address this issue, the firm is launching a grant program for Black, Hispanic and Latino-owned companies to provide financial assistance in meeting minimum requirements for doing business with large corporations.
At the start of this new year, Eric will be focused on supporting the initial supplier cohort as they complete the assessment and consulting process. The TruSight programme aims to act as a stepping stone for diverse suppliers to gain more contracting options within the financial services industry. “The programme is about opening doors for diverse suppliers”, Eric explains. “About eliminating barriers to opportunity."
The Future of DEI in Finance
Eric’s division aims to lead the path forward. “We all know that we need to do better in diversity, equity, and inclusion”, he says. Financial institutions have realised that they need to expand their view of services and contractors, companies and businesses—and that the old ways will need to change for them to thrive in the future.
So, I ask Eric, as a leader in the financial services field, and as a leader in supplier management within JPMorgan Chase, how does he think that firms can support and spend more with diverse suppliers? What does he recommend?
“Diversity should be ingrained in the culture of not just the procurement organisation, but the company as a whole”, he tells me. “When we are focused and intentional, the procurement organization can serve as a very effective tool in furthering diversity, equity and inclusion throughout the firm and the wider business community. When it comes to supplier diversity, the best practice is to prioritise it."
From Cybersecurity to Supplier Diversity
Eric’s journey to get here started out at the Indiana University of Pennsylvania, where he completed a B.S. in computer science and worked as an analyst, supporting JPMorgan Chase’s Financial Reporting Team. Not long after, he advanced to Senior Information Security Manager at the Bank of America, handling identity and access management, insider threats, card services, and information protection engineering.
In 2007, he returned to school to receive a Master of Business Administration in Information Technology from the University of Delaware. This led him to advance his career at Citi as a Director, Group Information Security Officer, and eventually, to JPMorgan Chase, where he started out as Head of Cybersecurity for Consumer and Community Banking.
But about four years ago, Eric made the transition, shifting to be JPMorgan Chase’s Global Head of Supplier Assurance Services. Since he joined supplier assurances, he’s seen JPMorgan Chase’s commitment steadily increase, as diversity, equity, and inclusion grow more important in the financial industry.
Diversity and inclusion, Eric knows, take an entire division, an entire company, working together to shift its culture. JPMorgan Chase serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. In other words, his firm is a well-established global leader, and with that reputation comes a sense of tradition, of long-held partnerships, and trust built up over decades.
Yet Eric knows that his job is to introduce new ways of thinking and new suppliers to his firm: to have difficult conversations with senior leadership; to implement new metrics that support diversity; to maintain excellence while upholding values that JPMorgan Chase has always stood for: integrity, accountability, and equity.
While JPMorgan Chase has always valued diversity, the inequalities exposed over the past two and a half years of the pandemic have prompted the firm to put more concrete actions in place. As such, Eric believes in coupling a strong, inclusive culture with metrics such as spend and diversity assessments. His division is now directly involved in supporting the firm’s top suppliers as they work towards that US$6 billion of spend with diverse businesses, along with using Eric’s past experience in cybersecurity to help diverse suppliers succeed.
The good part: he’s not alone. “Senior leaders at JPMorgan Chase have bought in and clearly support diversity, equity, and inclusion”, Eric explains. “Now we’re in a situation where we can successfully execute innovative programmes, and connect diverse suppliers to greater opportunity."