
JPMorgan Software Does in Seconds What Took Lawyers Many Hours - antouank
https://www.bloomberg.com/news/articles/2017-02-28/jpmorgan-marshals-an-army-of-developers-to-automate-high-finance
======
F_J_H
You've likely heard the quote that "every company is a technology company",
mostly used in the context of companies needing to be doing everything they
can to leverage and exploit new technology, or they'll be left in the dust by
more proactive competitors.

With that in mind, a key quote for me in the article was this:

>To help spur internal disruption, the company keeps tabs on 2,000 technology
ventures, using about 100 in pilot programs that will eventually join the
firm’s growing ecosystem of partners.

I think there will be a role emerging within Enterprises, (sort of like an
"insurance broker" who finds the best coverage options among a sea of
choices), that will be responsible for surveying new technologies that could
potentially help the firm, and running pilot programs to see how they
potentially help make the org. more efficient or more competitive.

One could argue that this is really the CTOs role, and it is, but often CTOs
are focused on building their own technology, or maintaining existing legacy
systems, and not so much on finding and implementing new technology that has
not yet hit the main stream. So, at least the focus needs to shift.

*edit: typos

~~~
Just1689
> I think there will be a role emerging within Enterprises, (sort of like an
> "insurance broker" who finds the best coverage options among a sea of
> choices), that will be responsible for surveying new technologies that could
> potentially help the firm, and running pilot programs to see how they
> potentially help make the org. more efficient or more competitive.

You have just described my role. We're calling ourselves Emerging Technology
Specialists for the time being.

~~~
contingencies
As someone who built a major crypto exchange working on a second fintech
business, this sounds interesting. Can you explain a bit more about where you
work, the types of tech you've worked with and how you see this evolving? Feel
free to reach me by email if you'd prefer not to discuss here.

------
js2
Meanwhile I'm going through a mortgage refi and the mix of old and new
technology is comical. I was hoping things had advanced since I last went
through this a decade ago but not so much. This is through eRates Mortgage and
you might think the "e" stands for electronic, but I'm not so sure.

So far I've had to:

\- Fill out an online credit application form, which among other things ask me
what year I started my last job and converted that to "years and months" but
was off by one since it appeared to be doing math as if the current year is
2016. That was at one particular web site.

\- On another web site, I was then able to e-sign about a dozen documents.
However, about half a dozen documents I had to print out, sign, scan, then
upload to a third web site.

\- One of the forms had an error, so I received an email from a mortgage
officer that read "You've received an encrypted message from
XXX@financeofamerica.com. To view your message Save and open the attachment
(message.html), and follow the instructions. Sign in using the following email
address: me@example.org". This comically required me to register with live.com
so that I could read the actual email and reply with a corrected version of
the form via an outlook web interface.

\- Yet another mortgage officer contacted me for additional forms, these were
sent as PDF attachments that I had to print, sign, scan, and email back (over
regular email this time) as further attachments.

\- There is no online site I can use to track the progress of things. I just
have to call or email periodically.

\- The forms as you might imagine are a mix of ancient government mandated
forms and sundry other requests that are from the loan company's underwriting
department.

On a semi-related note, I also just rolled over a 401(k) which was also unable
to be done electronically. The old 401(k) institution overnighted me a check
which I had to combine with a form I printed out from the new 401(k)
institution, then I had to overnight those to the new institution. 3+ days of
lost market gains.

~~~
kchoudhu
The mortgage documentation problem is on my list of things to work on starting
Q3 2017. I'd love to hear more about what's pissing you off -- may I email
you?

~~~
ericHosick
Had a company that was solving sort of this problem a while back (early
2000s). Read in forms (1003 for example), did automated underwriting (hooked
in with Fannie Mae), pulled in rate sheets from different Banks to do
automatic rate calculations for loan officers. Rate sheets were loaded in
daily. There was a rules engine to cover the many complex rules required to
determine if a loan was viable for a given 1003 form, etc.

Managed warehouse lines, etc.

~~~
kchoudhu
The issue has never been the backend systems at banks -- I've worked with that
stuff starting from origination through securitization and on to secondary
market trading.

The problem is the customer abuse ("needs list") that is a hallmark of
underwriting. There has to be a better way to get all that information from
the customer in the vanilla case.

~~~
ericHosick
> The issue has never been the backend systems at banks

I find this hard to believe considering the pains we were solving: now quite
some time ago. Maybe they have changed.

Excessive burden on mortgage consumers is driven by many aspects.

At it's core is (was if what you say is true) the inability for backend
systems to effectively aggregate and verify the necessary context to easily
meet regulatory needs.

We were starting to aggregate such data allowing us to automatically verify
and then fill out all forms necessary for the mortgage consumer.

------
ycombinete
This makes me wonder if we'll be entering a legal world that's complex to the
degree that _only_ computers can understand it.

~~~
ams6110
And a world where if your contract does not meet with the approval of the
computer, you are screwed with no recourse just like you are when Paypal
decides to freeze your account because one of their algos detected "fraud"

~~~
tluyben2
> when Paypal decides to freeze your account because one of their algos
> detected "fraud"

Even thinking about the times that happened to my company brings red in front
of my eyes. Not many companies are that bad luckily. Google adsense/adwords
comes close.

~~~
raverbashing
Blaming the algo is a nice cop-out by Google and Paypal and on top of that
they can afford canning their customer without many issues for them

But how much is that going to cost them over long term instead of having
actual thinking people reviewing the cases remains to be seen

~~~
tehlike
come on. there are >6b people on earth, with many many fraudsters trying to
make money at other people's expense. It's a problem that has to be automated
sooner or later.

Computers are also much faster in fraud detection. You use your credit card at
some store that you have never been, at an odd hour, and your bank triggers a
fraud lock, and declines the transaction. That's efficiency. When there are
billions of transactions occurring every day, of course a small error rate
will reflect itself on a large number of false positives.

PS: goog employee, but i appreciate fraud detection a lot (especially when it
comes to how easy it is to leak SSN in this country, and how useful it is for
obtaining credits)

Edit: fact check. there aren't 6b people using computers obviously.

~~~
jacquesm
> That's efficiency. When there are billions of transactions occurring every
> day, of course a small error rate will reflect itself on a large number of
> false positives.

Yes, coupled with _excellent_ customer service that sounds like a good plan.

Unfortunately your employer seems to have decided that customer service is
something they can't afford.

~~~
tehlike
definitely google is not known for super good customer service, I will give
you that.

~~~
smcl
It's actually much worse than "not known for super good customer service",
Google are known for _awful_ customer service and not just for the "free"
tier. I appreciate that as your employer Google means something different to
you, and you certainly shouldn't be expected to answer on their behalf ... but
lets not kid ourselves here

~~~
tehlike
When I write here, i try to write it on my own. Being a google employee
doesn't have any bearing on what I think about google products. I don't use
many google products, because there are better ones out there. I think that
should be the perspective when you read most comments here.

~~~
smcl
Sure thing - I just didn't want to sound like I was saying "as a Googler this
is YOUR problem" that's all :)

~~~
tehlike
ah - sorry i misunderstood. Thank you.

------
Taylor_OD
In Chicago JPMorgan is where a lot of software developers go to work for 5-7
years before getting a VP promotion and leaving for a C level role. I've seen
dozens of developers follow this exact track. Glad to hear they are doing
something interesting during that time.

~~~
technofiend
C level where? I'm curious what size roles you see people rolling into out of
a Fortune 500 like that.

~~~
Taylor_OD
Did a quick glance at linkedin connections who use to work there. Seems a lot
of them started their own company or moved to director level roles. Some C
level.

Examples:
[https://www.linkedin.com/in/mjwaitzman/](https://www.linkedin.com/in/mjwaitzman/)
[https://www.linkedin.com/in/amir-
wasti-2964491/](https://www.linkedin.com/in/amir-wasti-2964491/)
[https://www.linkedin.com/in/chuckcooper/](https://www.linkedin.com/in/chuckcooper/)
[https://www.linkedin.com/in/mattstratton/](https://www.linkedin.com/in/mattstratton/)
[https://www.linkedin.com/in/aprahamian/](https://www.linkedin.com/in/aprahamian/)
[https://www.linkedin.com/in/greggawheeler/](https://www.linkedin.com/in/greggawheeler/)
[https://www.linkedin.com/in/kamarajan/](https://www.linkedin.com/in/kamarajan/)
[https://www.linkedin.com/in/goodfellow/](https://www.linkedin.com/in/goodfellow/)
[https://www.linkedin.com/in/efrain-
perez-3858b41/](https://www.linkedin.com/in/efrain-perez-3858b41/)

Not all of those line up exactly with what I was talking about but my main
point is that its a large stepping stone company.

~~~
technofiend
Thank you for the well researched reply.

------
dboreham
Finally an article about self-driving lawyers.

My belief is that we won't have (real) self-driving cars until long after
we've automated lawyers -- legal work being a much more constrained, simpler
problem without too much potential to kill people.

~~~
kriztw
Definitely not for full automation. The question "do I have a case?" could
involve basically anything, and sounds very AI-complete to me.

Of course, discovery and a lot of the repetitive work can be automated much
more easily, but that's more like keeping the car in a highway lane, which we
can already do for cars.

~~~
funtober
Attorney here. Frequently do case evaluations for my firm. I prototyped this
last year. It was not as hard as you would think if you have some experience
in the area of law.

------
dowjones
In the early 1990's, JP Morgan developed software tools it packaged and sold
as "RiskMetrics." It standardized the way most banks measured and reported
their portfolio risk. For example, it was now easy to determine how likely a
portfolio would lose, say, 5% of its value. This underlying concept, called
Value at Risk, was baked into the RiskMetrics tool and quickly became the
default methodology for measuring risk among traders but also regulators, bank
management, and external portfolio managers and investors.

The problem was VaR had never really been tested in a real-world meltdown
situation. Its models all assumed even under duress, markets acted rationally
and traders' behavior was uncoordinated and uncorrelated. In 1998, the
spectacular failure of Long-Term Capital Management, was enabled by its
reliance on VaR (among other things, like bad trades and enormous leverage).
In a crisis, markets were NOT acting rationally, and neither were traders,
causing losses much larger than anticipated by VaR. Unfortunately, people tend
to repeat mistakes, so in 2007-8, once again, banks all over the world that
relied on VaR calculations to tell them their risk portfolio was small and
manageable, soon found out that it wasn't.

[http://www.nytimes.com/2009/01/04/magazine/04risk-t.html](http://www.nytimes.com/2009/01/04/magazine/04risk-t.html)

tl;dr: JP Morgan would be among the last companies I would trust with a
software innovation reliant on new, breakthrough algorithms.

~~~
beepboopbeep
There's a big difference between calculation and automation though. This
article starts with an operation that's a bit of both, but the big underlying
theme here is the automation of data digestion.

For all the pomp and pedigree of banking, it's mostly just moving data or
digesting data. Because of how complex banks are, they're easily a decade
behind the times and still _HEAVILY_ reliant on manual processes in excel. Any
real "streamlining" of processes is done through patchwork fixes with no
systemic reworks being done.

This article is implying systemic reworks. Banks live and die on their NII,
and would gladly gut their back and middle office personnel (most have done so
by outsourcing to India and Hungary) with automation. Truth be told,
rightfully so given the menial tasks of those jobs.

~~~
dowjones
>> The program does the mind-numbing job of interpreting commercial-loan
agreements

A computer program that interprets written language -- natural-language
processing -- is reliant on highly-advanced, complex algorithms and AI to do
the interpreting. This is much deeper than mindless "automation" and requires
absolute trust in the accuracy of the underlying algo (or, hiring back some of
those humans).

------
eb0la
I would like to see what's behind the hood. Since JPM is a bank I guess they
used SAP HANA using the text analysis services... but I would like to know a
bit more about the project.

Any pointers?

~~~
devy
According to this same Bloomberg article, JPM has 20k+ developers, I am fairly
sure they develop a significant portion of the softwares they use internally,
including their own cloud.

See the original article, 8th paragraph (under the sub heading "Redundant
Software")

------
thomasjudge
This article is really thin on details about the system featured in the
headline

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EternalData
There has always been a financial-legal-accounting complex that has accounted
for some large percentage of the economy. That used to be a large part of the
labor-capital compact -- at least some of the proceedings of capital were
going to well-priced labourers who could build the foundations of the upper-
middle class or slightly above.

Capital and its holders are getting more and more naked in their attempt to
save costs. Individually, this is great -- spurring automation forward
certainly frees people up. In aggregate, however, if political/social factors
aren't taken into account with automation, there will be a spate of people who
think they will have been robbed of their rightful earnings and their purpose
in life -- and that will have consequences, intended and unintended.

~~~
dragonwriter
> That used to be a large part of the labor-capital compact

No, it was just a necessary cost of maximizing capital returns given the
available tools. Elite labor often mistook itself for a natural class ally of
the capitalist class because of this, but that was a false belief driven by
transitional rather than fundamental conditions.

------
adrenalinelol
While this article seems to be a bit light on specifics, the automation of
most legal practices is something that ML will have a great affect on in the
near future (imo). Junior associates get paid insane salaries to do very
meaningless grunt-work at biglaw firms. Those who aren't on track to become
partners, are essentially burning the firms' resources, thus there exists an
big incentive to automate the work.

~~~
Erik816
Junior associates are not burning the firm's resources. They are the firm's
resources. They generate billable hours, which is how the partners make money.
Which is why most of the legal profession is much slower to replace them than
you might think.

~~~
PatentTroll
This is true too. The billable hour billing practice incentivizes
inefficiency. In some respects that makes the industry ripe for disruption,
but it's staying power may suggest the opposite, that is, that the business
isn't about being efficient. Sometimes as logical people we assume everyone
else is logical too. But my experience is that law firms are stuffed with
worker bee types who don't see the world that way. They are not the innovative
logical types who would develop something to increase efficiency

------
ImTalking
I think what JPMorgan fails to realise is that their entire business will be
subject to automation. In a way they are signing their own death warrant.
Obviously they will reap the benefits of AI while it's in it's infancy, but it
won't take a quantum leap to realise that most of their business can be
replaced by software eventually.

------
isubkhankulov
> Not all of those bets, which include several projects based on a distributed
> ledger, like blockchain, will pay off, which JPMorgan says is OK. One
> example executives are fond of mentioning: The firm built an electronic
> platform to help trade credit-default swaps that sits unused.

so it looks like JPM might have written off "blockchain"?

~~~
_-__---
To me, that reads as the author writing off blockchain moreso than the JPM
representative.

To be fair, there are plenty of ways that blockchained systems can fail.

------
TazeTSchnitzel
Laws resemble computer programs in many ways, so I suppose it is only natural
that computers be made to interpret them.

~~~
amelius
Some of my friends who are now lawyers were really bad at math in high-school,
so I'm not sure that equating law to computer programs is how it works in
practice.

~~~
tomc1985
It's not the math, it's logic. I see this parallel too -- legalese is
incredibly dense because it is very specific, and its unreadability stems from
(our) natural languages' disinclination towards specificity

------
_pmf_
A cynic may say that a lawyer takes many hours because they are billable.

~~~
0xdeadbeefbabe
A lawyer would say, "I bill in 15 minute increments."

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Zork212
Automation: less jobs, Government (at least in Europe/Cdn) say more people we
need to import more people to fill the jobs... but millions of jobs will
disappear over the next 10 yrs.

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jsmooth47
There will be a point where "software" will automate all of this stuff.
360,000 hours is a ton of full time employees. I wonder how they feel, and if
they are typing up resumes as we speak. Looks like machine learning and
similar skills are going to be more sought after than the normal finance or
law skills!

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ltdanimal
I think "360,000 hours" makes it a little more impactful. Was thinking 20
before I clicked the article

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baron816
$9.6 billion technology budget?! What do you think the Federal government's
technology budget is?

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vasili111
Why not to use same thechnology for checking source code for errors?

