Morning Coffee: JPMorgan's new team for devising and euthanizing IT projects; and Goldman Sachs gets Orwellian
Michael Elanjian at JP Morgan seems to enjoy his job, As the head of digital strategy and fintech, hired last year from Goldman Sachs, he has to try and fight off the disruptors and challengers – as the Star Wars-themed poster in his office has it, his mission statement is effectively “The Incumbent Strikes Back”. And as the leader of the internal fintech accelerator, he has a little bit more leeway than the average banking middle manager to call his employees “SWAT Teams” and give them cool sounding names like “Area X”.
But reading between the lines of the profile, it's probably the case that he spends more time destroying projects than launching them. The “Area X” teams (each one with a different name instead of the 'X' to reflect their location) are small groups of half a dozen techies, including experts in data science, user experience and other hot fields. Their role is to build demo applications quickly, taking projects from a whiteboard idea to a working prototype within six weeks. It all sounds very start-up.
But JP Morgan isn’t a start-up, even though the Area X teams are apparently encouraged to recruit from them. Megabanks can’t launch small products, and while six weeks is a realistic time horizon to put together something that “works”, it isn’t realistic if you want to put together something that works at the scale of JP Morgan. Simply handling JPM’s transaction volumes is a highly specialised and difficult speciality all of its own, while integrating new systems with legacy code is even more time consuming, if it can be done at all. Area X isn’t meant to handle this, though; the idea is that once the proof-of-concept demo has been approved, the project gets handed over to the regular JPM IT team and the business units.
But that can be dangerous. The biggest single generator of cost control problems in banking is an IT department that proliferates dozens of overlapping projects which everyone likes too much to kill, but not enough to complete. And unless you’re very strict on centralised data management, you can create even more headaches for yourself by siloing vital information in incompatible customised systems, then launching a dozen further projects to try and bring it back together.
So it’s vital to be able to, in Elanjian’s words “fail quickly and move on”. Having a tangible prototype presumably helps with this process; you can quickly spot something that’s not actually as cool as it seemed on the whiteboard.
It’s a tricky management task; in order to do their job, Area X need to get buy-in from the operating divisions which will take ownership of the system, but not to get too much buy-in so that there will be internal political pressure to take a project forward whether it’s working or not. Unlike in a start-up context, there is no equivalent of the funding and VC market to make this judgement, so Mr Elanjian might have to take the role of chief executioner. In the meantime, he's hiring. People who like ideas, but not so much they expect to see their implementation, should apply.
Separately, in Italy attendees to the Goldman Sachs hedge fund conference in Rome were reportedly treated to a brand new innovation – chips in their lanyard badges which allowed Goldman to monitor their location, and to check up on whether they had attended the meetings they were scheduled for. According to the bank, the idea was just to streamline the process and get rid of the registration queues (and to potentially reschedule meetings if someone hadn’t shown up). But the hedge fund managers and investors were understandably a little paranoid about having their movements tracked.
Even if the information was just used for the purpose stated, many financial professionals might feel a little uneasy about getting the helicopter parent treatment. One of the reasons why people go to conferences is for the opportunities they provide for serendipity and chance interactions, which are a lot more difficult to achieve if you’ve got a “helpful” conference organiser tracking you down and chivvying you to get back for your meeting. And for anyone who had organised an unrelated business meeting elsewhere in the same city, having your schedule effectively readable by any of the conference staff could be a serious security breach. This feels like a technological breakthrough that might need to be thrown back into Area X.
“When you’re growing at 17 per cent per year, you feel like you’re doing everything right” – David Solomon refers to Goldman Sachs’ golden period between the IPO and the financial crisis, in a discussion of cultural issues at a Silicon Valley conference. He also passes on the fact that sixty percent of GS employees are 30 years old or less and that 75% are millennials or generation Z. (Recode)
Trading is, after all, a young person’s game, and age discrimination is tolerated on trading floors in a way in which other forms of bias would never be. Banks feel the constant need to “make room” for younger traders, but don’t seem to have any process for doing this without losing all their collective memory (Financial News)
Grim scenes from Deutsche Bank’s U.S. operations, as they wait for the restructuring plan to be announced. “Some are openly searching for other jobs at their desks”, while others drown their sorrows with lunchtime beers. (Bloomberg)
A cultural history of gingham, the finance bro’s shirt fabric of choice. (Vox)
Ashok Vadharan was offered $1m to join Goldman Sachs as an associate and became a partner within four years. Now he’s the last remaining of the Blankfein-era trading bosses, with the challenge of bringing Goldman’s FICC franchise back to its former glories. (Bloomberg)
“There is no plan except cost-cutting”. UBS wealth managers are beginning to sour on the divisional structure introduced in 2018 and cultural issues remain between the US brokerage model and the global private bank. (Finews)
Supurna VedBrat, Blackrock’s head of trading thinks that “you don’t need human intelligence to click trades” and that AI will take over much more of the execution chain in years to come (MarketsMedia)
The Tinder date gone really badly wrong; over £180,000 lost to a con artist who posed as a senior wealth manager from Citi (Evening Standard)
And if you’ve always wanted the title “CFO” on your resume, the golden age is here; all the European subsidiaries set up as a result of Brexit are hiring local chief financial officers to meet regulatory requirements (WSJ)
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