‘The house Jamie built’: How JPMorgan Chase became the industry’s conscience

For anyone who works at, for or with JPMorgan Chase, there’s a familiar mantra that runs through the entire company.

It’s “do the right thing,” a Chase principle that emerged in CEO Jamie Dimon’s first annual letter to shareholders as CEO in March 2006. “Jamie always says, ‘you know what the right thing to do is, we all know what the right thing to do is,’” said Susan Canavari, Chase’s chief brand officer. “He says it consistently.”

It’s a surprising mantra, more at home in a Silicon Valley tech startup than coming from the leader of the largest U.S. bank by assets and highest paid bank CEO in the country.

After all, America loves to hate banks and bankers: They’re often portrayed as soulless money making machines that make the rich more rich and the poor more poor, often by politicians. Fear of a greater wealth divide helped amplify the break-up-the-banks rhetoric and fueled drain-the-swamp promises of the 2016 U.S. presidential election. Millennials especially tend to be more critical of financial brands and institutions, said Kellan Terry, PR data manager at Brandwatch; they lived the 2008 recession and either experienced the loss of jobs or the difficulty in finding jobs that came out of it.

But somehow, JPMorgan Chase has emerged as the responsible one, the do-good, do-the-right-thing entity that stands, at least externally, separate from its peers.

But JPMorgan’s connection with the public today seems especially pronounced next to its quieter peers. Brands know well not to upset their customers and maintain the largest possible audience of potential consumers. Banks in particular tend to appear disconnected since they’re always tied up with a political or other corporate interest. “Do the right thing” is not the Chase slogan, but this summer alone the bank has emerged as the voice of conscience in its industry through its various statements, tweets, initiatives and donations.

Since August 1, JPMorgan has been mentioned more than 88,000 times online, according to Brandwatch. Within the past month JPM online sentiment has skewed positive at a rate of 57.8 percent.

“What JPMorgan has figured out before some of its peers is they need to speak on what they want this world to represent and reflect,” Terry said.

Chase is putting its mouth where its money is
In June, Chase removed its local TV and digital ads from all NBC news programming until after a planned interview with right-wing provocateur Alex Jones by Megyn Kelly aired.

The bank’s chief marketing officer, Kristin Lemkau, wasted no time showing where she, and therefore Chase, stood on the controversial interview.

The presidential election changed the landscape of social media permanently and majorly, Terry said. Instead of talking about who’s wearing what designer and meme sharing, people began to need to know who’s on what side of the political divide.

“You lead by example and by your own personal brand, and for [Dimon’s] own CMO to be able to do that — it comes from the top,” said Sam Maule, North American managing director for fintech consultancy 11:FS.

Just a year ago brands were still sticking to the old rule of thumb: don’t upset your customers or potential customers. Today, brands don’t have the luxury of appealing to everyone, Terry said. They’re wising up to the fact that in the current social media environment they have to upset some people — because Americans are that polarized today.

A few weeks after the Alex Jones incident, an internal memo to staff from Peter Scher, head of corporate responsibility, surfaced online, saying the company would pledge $1 million to be split between the Southern Poverty Law Center and the Anti-Defamation League “to further their work in tracking, exposing and fighting hate groups and other extremist organizations across the country.”

Of course, this plays into marketing. After all, people love brands that “take a stand” on issues that matter to them. Research shows 75 percent of consumers expect brands to make a contribution to their quality of life, but only 40 percent believe they do.

“As long as it raises some eyebrows and people start to consider your bank as more of an entity comprised of human beings that go to work and live in the same environment that you do, as more relatable — that’s not a bad thing,” Terry said.

A word from Jamie
Between those two events, violence erupted when white supremacist and neo-Nazi groups protested the removal of a Confederate statue in Charlottesville, Virginia. Dimon sent a note to employees saying he “strongly disagrees with President Trump’s reaction,” to the incident. 

That note struck a chord with the public. That day, August 16, JPMorgan was mentioned more than 7,300 times on social media. The major topic and theme behind these mentions was Jamie Dimon’s statement and how he deviated away from what Trump said about Charlottesville, Terry said.

“People weren’t necessarily shocked by it, but they thought it was unique because not as many companies — especially banks and financial institutions — are coming out critically of this administration,” he said.

Then Chase took another stand when Dimon resigned from Trump’s manufacturing council.

“We needed it, we need strong leadership now and if from a political standpoint we’re not going to get it, business needs to stand up,” Maule said.

The conversations that generally circulate around these banks and other financial brands on social media are a lot like those among airlines: both generally use social media to address customer concerns and complaints. Those conversations tend to be more negative; customers run to Twitter to tweet out a problem they’re having, like why their debit card isn’t working or why the mobile banking app is janky.

But as a brand and institution in general it’s now important to address things that garner public reaction; otherwise, people will notice the bank’s silence, Terry said.

“If Jamie Dimon hadn’t come out and said anything like this — instead of talking about if this message was resonating with millennials we would be talking about why there hasn’t been any message at all ever.”

Is it genuine?
Dimon has a reputation for being outspoken and never shying away from the world stage. Some of that has to do with the narrative he’s built for himself, said one former employee of the bank, who remains positive about Dimon’s authenticity.

“I think it’s pretty genuine,” said a former JPMorgan employee. “Of course he cares about the business and the shareholders but I do believe he cares about doing good and right by customers.” 

Dimon’s vision extends to the everyday business. While he once famously declared Silicon Valley is coming to eat Wall Street’s lunch, he then also led the company through its push into fintech and it has emerged as a leader in innovation among its legacy banking peers. It’s at the forefront of Wall Street’s relationships with fintech startups, having invested $600 million just in partnerships with fintech startups in 2016. Last year it also began shifting its data trove to public cloud storage and creating its own private cloud. And that was part of a greater $9.5 billion budget dedicated to technology. Chase’s transformation from a slow, siloed organization to a more agile, open one has brought the importance of company culture and leadership to the fore.

“With this digital push in the firm, it’s really hard to devise an overall culture for the entire company,” the ex-JPM employee said. “It’s very driven by each division of the bank and how the head of that division drives down culture for that side of the house. Jamie is in an interesting role because he does act differently depending on which side of the bank he lands… on the investment banking side he’s not as ‘nice and friendly’ but on the Chase side he 100 percent is.”

The arrival of fintech has presented an opportunity for banks to change mainstream consumer perception of retail banks and distance themselves from investment banking’s reckless investors.While other banks are also pushing forward on fintech innovation, they’re keeping things closer to their chest, which doesn’t make for good marketing. Last year Goldman Sachs made its first foray into consumer banking, launching an online bank with a $1 minimum deposit. This year it launched an online consumer lending startup with the slogan “Debt happens. It’s how you get out that counts.” In 2015 Citi launched its FinTech unit, which is dedicated to making its workplace feel like a startup and breaking the misconception that large banks are “too big to change,” its CEO told Tearsheet in March.

“Chase sees an opportunity to differentiate itself from ‘Wall Street,'” the former employee said. “There’s only one Jamie at the entire bank. It’s like the house that Jamie built.”

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Top 10 things JPM’s Jamie Dimon said about fintech

Start your workweek off right with a roundup of Jamie Dimon fintech gems. While he’s sometimes disparaging of the shady behavior of the startups, it turns out JPMorgan’s chief is very much focused on fintech. For someone who claims that fintech isn’t actually anything different, he certainly has a lot to say about the space: from Silicon Valley to payments to marketplace lending to consumer data, Jamie Dimon will tell you how fintech is changing finance.

Serious contender for the best Jamie Dimon quote ever: When asked about how financial technology is replacing real jobs, JD replies,

“There are downsides to flying — people die every now and then. Do you want to stop all air flights?”

Read more: Dimon can’t stop talking fintech and just dropped a remark that JPM plans to offer free roboadvice to its best clients.

Paypal isn’t a bank, but it may be the new face of banking

In the race to shift services to the web or mobile phones, the stakes are in the billions of dollars for traditional banks and upstarts alike. Paypal has said that it has no intention to upend banks, and that its next target market are the 2 billion plus people who are currently unbanked. Nevertheless, with its popular Venmo unit enabling consumers to take small money transfers into their own hands, Paypal seems very happy to serve banked consumers as well.

As with any new technology that encroaches on traditional banks’ turf (think bitcoin), banks have been quick to point out that due to a lack of government regulation, your money isn’t as secure with Paypal as it would be with a traditional bank. Will that stop the gravitation towards mobile wallet services offered by Paypal and others like Stripe, Square, SoFi, and TransferWise? The Wall Street Journal thinks not.

The road to nowhere: legal cannabis business can’t be solved by fintech

A clash in state and federal rulings has prevented banks from accepting money from cannabis sales. This legal limbo prevents banks from doing business, but more importantly is life-threatening to marijuana retailers; with nowhere to bank, “ganjaprenuers” deal entirely in cash, making them a prime target for thieves.

Fintech has come up with some creative solutions to this state versus federal imbroglio. However, at the end of the day, the problem is a legal one. Until Congress is replaced by robots, tech won’t be the savior for legal marijuana banking.

The march of the bots for customer service: should bank CIOs slam shut or swing open the door?

The emphasis here is on humanizing robots rather than “robotizing” humans, letting those humans who care most about outcomes make sure the end-to-end customer experience is continuously improved.

This means that long-suffering (human) customer service representatives will finally get (robotic) personal assistants to help them proactively find the information they need to use on their computers. In this way, customer service professionals will spend less time searching for things and more time actually serving customers. However, outdated legacy banking systems may prove to be a major stumbling block on the way to this robotic/CRM utopia.

For more on cyborg fintech, read “How quant hedge funds balance computer and brain power”.

AIG enters the crowdfunding market [drops mic]

Insurance exists to reassure and protect policy holders. Whatever may come, insurance says comfortingly – whether car accident, disease, fire, loss, theft, or even death – we’ve got you covered.

Which is why crowdfunding insurance is somewhat of an anomaly. Though AIG just entered the market with Crowdfunding Fidelity, a new crowdfunding insurance policy that will be made available to select crowdfunding platforms, the coverage period and cap mean that the insurance offered is very, very limited.

Bottom line: investors probably shouldn’t breathe a sigh of relief just yet.

Photo credit: Loozrboy via Visual hunt / CC BY-SA

Top 10 things JPM’s Jamie Dimon said about fintech

When it comes to fintech, the CEO and Chairman of the US’s largest bank by assets is very vocal. JPMorgan’s Jamie Dimon frequently hits the road to visit startups in Silicon Valley, he’s hitting the podcast circuits to talk fintech, and he dedicates a lot of ink in his firm’s yearly investor communications to discussing the future of finance.

Dimon’s always happy to talk about fintech and he’s outspokenly encouraging and critical of the industy.

In Dimon’s world, fintech isn’t really anything new. During his banking career, technology has always played a major role in creating new products, reducing costs, and providing a better consumer experience. But as CEO, it’s his job to understand exactly what advantages fintech is bringing to the financial ecosystem and then partner, build, or buy his way to bring these new technology to his current and future clients.

Fintech, Silicon Valley, and Incumbent Banks

Kara Swisher does a good job getting Dimon to open up on her Jamie Dimon’s interview on Recode Decode , though when you listen to the audio, he tries hard to stick to his talking points. Dimon isn’t in the Valley to mess shit up; instead, he’s there to make peace, to identify promising technology, and to partner. Sure, fintech’s a threat for incumbent financial institutions but in Dimon’s world, everyone can find a way to work together.

On traveling to tech hubs like Silicon Valley:

  • “I come [to Silicon Valley] all the time and so does much of our management. We use these trips to learn about what’s keep our people a little bit scared, to make sure we learn how to use things things to better serve our clients.”

On how fintech isn’t really new:

  • “I don’t buy that fintech is completely different. Technology has been changing the world since we invented agriculture. My whole business career technology has been a critical part of what a bank does. Fintech isn’t just about good technology but about solving business pain points.”

On how fintech threatens (or doesn’t) his business

  • “I’m not nervous about fintech changing the way people are changing their banking habits but I think, in a capitalist world, it’s good that your business model gets attacked. I applaud that. That’s why we’re all here in Silicon Valley. Some of our businesses will be hard to attack — others will be easier to attack. Like payments. There are weaknesses in these systems that were built a long time ago.”

On JPM’s commitment to payments

  • “I expect to win in payments.”

When asked about how financial technology is replacing real jobs:

  • “There are downsides to flying — people die every now and then. Do you want to stop all air flights?”

Bloomberg’s John Micklethwait’s feature interview with Dimon

Jamie Dimon Bloomberg interview
Cover artwork: Kelsey Henderson

Earlier in 2016, John Micklethwait saw with Jamie Dimon to conduct what turned out to be a pretty wide-ranging interview. The Bloomberg reporter questions the JPM CEO on his firm’s role in the financial crisis, how the banking sector has (or hasn’t) rebounded afterwards, fintech’s role in the financial ecosystem, and how banking has evolved through Dimon’s 30 year career.

When asked if he thought banks were more moral than markets:

  • “A bank is a relationship. I can’t desert you and expect to have a strong relationship afterward. If I told someone, “I know you’ve been buying milk from me and you need milk to survive. But the price is no longer $2 a gallon. It’s going to be $40 a gallon. I’m going to bankrupt you.” What do you guys think of me? You would hate us. I mean, obviously some of these banks did bad stuff. Yet even in the depths of the crisis, banks didn’t materially change the prices for clients.”

On the mundane world of lending and why fintech does it faster:

  • “Let’s look at lending, where they’re using big data for the credit side. And it’s just credit data enhanced, by the way, which we do, too. It’s nothing mystical. But they’re very good at reducing the pain points. They can underwrite it quicker using—I’m just going to call it big data, for lack of a better term: “Why does it take two weeks? Why can’t you do it in 15 minutes?”

On how he’s positioning JPM to speed up the lending process:

  • “For example, they might lend to one of our customers who’s got a $200,000 JPMorgan Chase loan, and this person wants to get another $20,000 for a new truck or a piece of equipment. And what does he do? He goes with them, because he gets it in 15 minutes. If he goes back to the bank, he may have to go through this whole big long process for that $20,000. Can we do something like that? Of course we can. I’ve asked our people, “Why don’t we just put a revolver on top of our basic loan?” Make it easier for the client.”

An investor’s perspective: Fintech and JPMorgan

In his yearly missive to investors, fintech discussion has become kind of a regular column. It’s within his periodic communication to investors [.pdf] that Jamie Dimon is at his most comfortable discussing the technological challenge to banking. It’s also where he’s at his most vulnerable, as the NYT’s Ron Lieber recently took the bank CEO to task for some seemingly disparaging comments he made regarding fintech startups (comments that Dimon said were taken out of context).

On banking’s general appetite for new technologies:

  • “If you look at the banking business over decades, it has always been a huge user of new technologies. This has been going on my entire career, though it does appear to be accelerating and coming at us from many different angles.”

On how some fintech startups are selling consumer data way after a user stops using the technology:

  • “Many third parties sell or trade information in a way customers may not understand, and the third parties, quite often, are doing it for their own economic benefit — not for the customer’s benefit.”

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