JPMorgan just unleashed hundreds of Investor Day slides. These 6 hold key clues about the bank's future, from investment banking to AI. (2024)

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AI to eliminate "no joy" work

Mary Erdoes, the CEO of JPMorgan's asset- and wealth-management business, spoke at length about how her unit was using AI to help employees. She said her unit aspired to train all of its workers in AI to get them ready "for the AI of the future," and she outlined some of the ways AI had been helping bankers do their jobs.

She said AI was reducing what she called "no joy" work, adding that some analysts had told her AI was already helping them shave hours off their workdays.

Some of the ways the bank said AI could come in handy were big and sweeping, while others were small by comparison. One slide showed how AI could assist in tasks as varied as augmenting trading strategies and assisting financial advisors with their prep for client meetings.

Broadly speaking, AI was a hot topic for other bank leaders at investor day, too. CEO Jamie Dimon later addressed how he thought its advent would transform the economy.

"I think it's going to change every job," he said, including potentially eliminating some roles altogether. "You can't envision one app, one database, or one job where it's not going to help aid or abet."

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It's targeting private-equity clients

Doug Petno, a cohead of global banking within JPMorgan's commercial and investment bank, said one growth area for the investment bank was the private-equity industry, known in industry parlance as "financial sponsors."

"Financial sponsors is a large opportunity that plays directly to our strengths," Petno said, pointing to the bank's business with midsize companies and infrastructure.

The private asset world's troves of "dry powder" — capital waiting to be deployed for dealmaking —has swelled to record levels. S&P Global found at the end of 2023 that investment firms had accumulated nearly $2.6 trillion in dry powder. JPMorgan's data showed the number had reached upwards of $3 trillion.

In recent months, Wall Street dealmakers have been signaling that the investors who entrust their money with financial sponsors —known as "limited partners" — are itching for asset managers to pull the trigger on deals in spite of heightened interest rates. Their growing appetite to see returns on their investments could prognosticate a more-robust pipeline of transactions in the months ahead.

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It's expanding its middle-market coverage

Due in part to the trillions of dollars private-equity companies have to spend, JPMorgan is also looking to expand its focus on midsize company banking.

Petno said the bank was in 85 of the top 100 markets. "This year will move into 70 markets," he said, adding that the unit's 150 bankers "continue to see tremendous room to grow."

Handling deals for midsize companies, often called the "middle market," seems to hold promise for investment bankers hoping to overcome Wall Street's mergers-and-acquisitions malaise during the past two years.

Heading into 2024, more than half of dealmakers (55.2%) polled by the Association for Corporate Growth predicted more deal activity this year versus last year. A separate report from the audit and advisory firm Cherry Bekaert found that middle-market companies were more resilient to adverse market conditions, more nimble in reducing costs, and were benefiting from a continual supply of debt capital to fund deals.

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It's targeting Silicon Valley clients

JPMorgan's investment bank is also placing a greater emphasis on what Petno referred to as the "innovation economy," which includes startups, private-equity portfolio companies, and venture-capital firms. Petno said JPMorgan was positioned to help these firms, their founders, and their investors at every stage of their growth, from private banking to capital raising.

As it makes a push to carve out its slice of the Silicon Valley gold run, JPMorgan is set to face competition. Other banks have made pushes in recent years to position themselves as one-stop shopping for high-net-worth individuals, promising to leverage their full suite of capabilities such as deftly handling mergers and acquisitions and managing founders' and wealthy clients' personal finances.

For instance, Goldman Sachs' One GS initiative seeks to help financial professionals across the firm's multiple business lines drive revenue by offering clients an array of services under one banner. During the pandemic, the Swiss financial giant UBS has also deployed middle-market investment bankers to regional hubs for its private-wealth business to convince clients to entrust its M&A dealmakers with transactions such as sales or purchases on behalf of the companies they run.

And, reflexively, UBS was recently reported to be evaluating a reward program as one way to incentivize investment bankers in Europe and Asia to tap their Rolodexes of corporate connections, with the goal of landing new business opportunities for their colleagues in wealth management.

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It raised an important revenue metric

JPMorgan increased its forecast for net interest income, an important revenue generator for banks. Net interest income is the difference between the revenues generated by interest-bearing assets and the costs of servicing interest-bearing liabilities, such as debt.

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But spending also increased

The bank's acquisition of the firm First Republic was one factor that contributed to a $1.4 billion increase in year-over-year technology expenses. There were others, too.

"The use of data is growing. We have more digital engagement from customers, and we're delivering new digital experiences," Jeremy Barnum, JPMorgan's chief financial officer, said. "In addition, actual transactional volumes are increasing across the company, and we've grown the number of employees. So all of this together drives volume-related increases to our tech."

Barnum added later that other costs tied to human capital had also driven up the bank's spending projections for 2024.

"While we don't call out inflation as a stand-alone driver, you could argue that it's embedded in all of these, as both labor and non-labor expenses are higher than they otherwise would have been," he continued. "And while we're past the peak inflation moment, we do continue to see some upward pressure on costs, especially as certain longer-dated elements of the expense base reset."