Constellation Research published several articles highlighting artificial intelligence (AI) and directions for technology investment for Goldman Sachs and J.P. Morgan.
Goldman Sachs chief information officer Marco Argenti said the investment bank is betting on generative AI and technology that won’t replace human workers but make them superhuman and prioritize the customer. Speaking during the keynote at the Domino Data Lab Rev 4 conference, Argenti outlined a bevy of thoughts on digital transformation and staying ahead of the AI curve.
Goldman Sachs has plenty of AI and machine learning technology and generative AI will be another wrinkle over time. “There’s a realization from the very top of Goldman Sachs that you cannot be a leader in your industry without technology. It’s even more so with AI. The leaders in any industry will be leaders in AI,” said Argenti.
The mental model for AI management and prioritizing. Argenti said the scaling of AI can rattle humans. “It’s hard to say you’re an expert in anything with AI,” said Argenti. “It comes down to how you think about the future.”
Argenti said Goldman Sachs is internally trying to get consensus over the AI strategy, but it’s likely there will be humans, large language learning models and a “swarm of small models to create a constellation of specialists.” “Humans will focus on relationships, intuition, wisdom and instruction,” he said.
Engineers will move from focusing on how something gets done to what and why, he said. “You’ll have to understand the customer and customer benefit,” said Argenti. “We’re all becoming prompt engineers. With generative AI it will be more about writing instructions than code. It will be all about the mental model.”
Argenti likened the change in the computer science profession to when compilers were abstracted. “Engineers will have to conceptualize and understand why they are doing something,” he said.
Changing a culture with data. Argenti said he wants his team to move from a vertical approach to one that’s more horizontal and distributed. To change culture, you need trust, he said. Data transparency will be key. “Data creates transparency. Transparency creates trust. Trust shifts culture,” said Argenti.
J.P. Morgan said it will spend $15.3 billion on technology investments in 2023 and deliver more than $1.5 billion in business value from artificial intelligence and machine learning efforts in 2023 as it leverages its 500 petabytes of data across 300 use cases in production. The technology budget has grown at a 7% compound annual growth rate over the last four years.
Some of this spending is to maintain infrastructure, but a lot of it is tied to automating processes, engaging customers and investing in artificial intelligence.
CFO Jeremy Barnum said in another article: “What are the benefits of being the biggest tech spender? I just think it’s sort of mandatory right? I mean, we’re a big and very technology-centric business, and the world is competitive. And everything is changing. Younger generations have different expectations, and we have to be nimble, and we have to be on our front foot. And otherwise, we risk getting severely disrupted.”
CEO Jamie Dimon said the bank has to invest in technology to stay relevant. He said Wells Fargo is an obvious competitor, but there are non-traditional rivals too like Apple, Stripe, Chime and Dave too. “There’s a lot of people coming up with these businesses in different ways. Some have been quite successful, like Stripe in payments. And so, we want to be very good and very competitive,” said Dimon.