NEW YORK – Faced with growing competition from tech companies like Apple and PayPal Holdings, JPMorgan Chase spends $ 12 billion a year on technology to differentiate itself, and Asia is at the heart of its innovation strategy.

In an interview with Nikkei, Chief Information Officer Lori Beer highlighted the region’s role in the bank’s technology plans.

“There are a lot of innovations, especially when you think of banking, consumers and expectations, in Asia in general. We are looking at the trends that are happening in Asia. Things are a lot more digital when you think about some of the major ones, even consumer banking. There are a lot of things in the fintech ecosystem and emerging companies in the tech ecosystem that we are monitoring, tracking and monitoring across Asia.

Asia is a major technological development hub for JPMorgan, home to most of its engineers. The company has three Indian offices, as well as bases in Singapore and Hong Kong, and the region is handling some developments of its retail banking application.

“When we look at Asia, a lot of it depends on the availability of talent. Unbelievable and incredible technological talents, the number of engineers who are coming out of this market. We also see a great diversity of genres. When you look at the density of engineering talent in India, Singapore is a much smaller country, but of great talent. Hong Kong, great talents. These are really talents in all fields of activity. I can find some great people who are building these business platforms that we talked to. I can find great people who are really committed. “

Making good use of this talent will be crucial as the bank faces more and more competition from management. JPMorgan CEO Jamie Dimon said: “I expect this to be very, very tough and brutal competition over the next 10 years.”

Southeast Asia has been a breeding ground for “super apps,” from companies like Grab, which offer financial services among their wide range of functions and are gaining traction as digital wallets. PayPal and Apple are looking to bring this model to the United States, potentially putting them on a collision course with American banks.

“We’re an organization of over 52,000 technologists, and it’s growing. We’ll likely see that increase in both 2021 and 2022. Like everyone, we’ve always invested in technology for the long term.”

The bank will spend $ 12 billion in 2021 on technology, about 10% of 2020 net revenue and about a third more than its 2015 tech budget, of which about half is invested in innovation. It offers education and training programs for non-technical employees such as bankers to facilitate the large-scale implementation of new systems.

Artificial intelligence is a priority area. JPMorgan has implemented AI fraud detection that alerts compliance officers to signs of potential problems. This system detects $ 150 million in problematic transactions per year, mostly in retail banking.

The bank is also customizing its JP Morgan Markets portal for clients via AI and has used the technology for credit management during the COVID-19 crisis, according to Beer. “We’re also working with the lead on next-generation products and capabilities to consider,” she said.

JPMorgan accelerates development with its cloud-based OmniAI platform, which enables data scientists to quickly and securely transfer highly sensitive internal data. A former senior Google executive led the team that created the platform.

“One of the biggest advantages [of our AI platform] is to improve productivity or make it as efficient, as efficient as possible so that a data scientist can build a model, train a model, manage the life cycle of a model. “

JPMorgan is using AI to harness one of the big advantages of the bank more efficiently: its wealth of customer data.

“We’re really good at understanding a customer’s lifecycle. We have a high data density. If you think of our consumer businesses, we support 50% of American households. When you think of our wholesale businesses, we back 80% of the Fortune 500. We move $ 7 trillion a day. We have a deep and rich information density. “

Blockchain technology is another research and development priority. JPMorgan began to invest seriously in the field about five years ago and has since launched JPM Coin, a shared ledger system for transfers. The bank has reworked its international payment system around JPM Coin to allow corporate clients to transfer money around the clock.

The digital currency is connected to JPMorgan’s Liink network, an interbank information sharing platform for cross-border payments with more than 400 financial institutions on board, 90 of which are in Japan.

The proliferation of digital currencies in the private sector is prompting central banks to consider issuing theirs. The US Federal Reserve is expected to publish a discussion paper on the subject shortly.

“I don’t see CBDC [central bank digital currency] as a competitor in itself. I think, again, if you think of multi-currency type scenarios, ultimately central banks will be looking at their digital currency strategy, the underlying technology, or an actual application. And when we also talk about JPM Coin, it also focuses on wholesale banking apps. “

JPMorgan partnered with the Monetary Authority of Singapore and Singapore-based DBS Bank on Project Ubin, an effort to create a multi-currency payment platform using blockchain technology that envisioned the possible inclusion of digital currencies. central bank in the future.