Wall Street’s biggest bank is taking a cue from Amazon in using customers’ spending histories to sell them products or services they might want in future.
JPMorgan Chase, which has the biggest sales and trading businesses in the world, is launching a new Customer Relationship Management and analytics system so that its sales people can sell better, a person familiar with the project said.
While CRM has been common place in other industries for decades, banks have been slow adapters. Their systems are notoriously poorly linked up, traders usually have to manually look up clients and may only then get some of the information the bank holds about that clients’ dealings and preferences.
JPMorgan’s system works by linking clients’ phone calls to profiles of the customers’ previous trades and trading behaviours, using the same technology that call centres have employed for decades.
JPMorgan then overlays an analytics programme to help the salesperson suggest trades that would be most suited to the client. “It’s a little bit like how Amazon suggests what you might like to buy next,” the person said.
One large US institution said they did not yet have a system like JPMorgan’s but it’s “a good idea”. A person at a large European bank said they were planning to introduce something similar later this year which would identify callers and flash client details on to a screen with details of meetings, holdings and due diligence on the client. The information would be subject to controls on who could see and deal with the clients in question.
The bank declined to comment, but the person said JPMorgan hopes the new system will create a “more tailored and individual client experience”, and will ultimately result in clients buying more products and services.
Clients will be able to request that certain information about their trades is known only by the people they deal directly with and not included in the general system.
The bank hopes to eventually host the system on “the cloud”, an online storage facility, so its sales people across the globe have the same tools and clients get the same service.
The new sales and trading system is part of a wider technology and innovation investment by JPMorgan, which made almost $21bn in sales and trading revenues in 2016.
That was 15 per cent more than JPMorgan’s sales and trading revenue a year earlier, as the fallout from Brexit and then Donald Trump’s surprise election as US president drove a flurry of trading.
The underlying trend is bleaker; banks have all experienced sharp falls in trading revenues since the financial crisis began in 2008, and have also suffered a steep increase in costs, both in terms of holding extra capital and the cost of complying with a raft of new regulations.
This has made it essential for banks to find ways to become more efficient and exploit new commercial possibilities. Several banks, including HSBC and Barclays, have tried to bolster their investment banks by getting their corporate and investment banks working more closely together, so that corporate clients get earlier and more targeted exposure to investment bank products.
Technology has been both a friend and foe for traditional banks. Initiatives such as JPMorgan’s, and moving to electronified platforms for some products such as equities, have helped banks become more efficient. Lenders are investing significant resources in technology — Goldman Sachs employs more engineers than Facebook — as they seek new efficiencies.
But technology has also empowered a new crop of nimble competitors who offer a no frills trading service cheaply through online portals and apps.
Additional reporting by Ben McLannahan in New York