Fund Insight: ODDO BHF AM Artificial Intelligence

4 juni 2024

This month, we take a look at the growing importance of Artificial Intelligence in non technology sectors, by analyzing the specific case of the banking sector. The recent publication by Jamie Dimon, CEO of US banking giant JP Morgan, of his letter to shareholders not only gives us the opportunity to do so, but also provides a striking illustration.

ARTIFICIAL INTELLIGENCE: A VAST FIELD OF APPLICATION WITHIN A BANKING GROUP

Every year, Jamie Dimon's report to shareholders is essential reading for anyone interested in the world of banking, finance and, more generally, the global economy. The reason: this document is comprehensive, detailed and clear. Above all, it is written by an expert in the financial sector who also has a unique vantage point, as JP Morgan is one of the world's largest banking groups.In his latest opus, published in April 2024, Jamie Dimon ranks the impact of Artificial Intelligence as the first and foremost challenge facing his group. The following key points emerge from his analysis :

In his latest opus, published in April 2024, Jamie Dimon ranks the impact of Artificial Intelligence as the first and foremost challenge facing his group. The following key points emerge from his analysis :

The consequences of AI will be extraordinary, if not as revolutionary as some of the major technological innovations of recent centuries: e.g. the printing press, the steam engine, computers, the Internet, etc.

The JP Morgan group now employs 2,000 Artificial Intelligence experts: data scientists, machine learning experts, etc.

JP Morgan has put in place over 400 practical examples of the use of AI in its activities, in fields as diverse as marketing, fraud detection, risk management, etc.

Beyond these areas of AI intervention, which are logical enough by the way, the Group is currently exploring an even wider field in which Generative AI (i.e. content-generating Artificial Intelligence) can make a significant contribution: software engineering, customer service, employee productivity, etc. More generally, according to Jamie Dimon, AI can redesign all internal processes.

The critical aspect of AI for the business of a major bank has prompted JP Morgan to create the position of “Chief Data & Analytics Officer”, giving its holder a seat on the group's operating committee.

We broadly share these convictions. In particular, we're convinced that AI represents much more than just a technological advance. It has the potential to profoundly transform industrial and commercial enterprises, as it brings additional productivity in many areas, of which Jamie Dimon gives only a limited view above. The adoption of AI by companies in all sectors of activity will therefore, according to our analysis, be imposed “top-down” by members of their General Management, as part of their fiduciary responsibilities, in order to gain in competitiveness (and, at the very least, to avoid being left behind by bolder competitors, who would integrate AI internally very early on).

THE BANKING SECTOR: PARTICULARLY FERTILE GROUND FOR AI

The projects cited by Jamie Dimon for the use of AI are credible because the banking sector concentrates the elements of a breeding ground on which AI can grow. As a preamble, let's remember that the JP Morgan Group has a universal banking model, like many banks in developed countries. This means that its activities range from retail banking to capital markets, asset management, private banking and more.

This broad spectrum of activities enables such large financial institutions to generate an impressive wealth of data, both in terms of quantity and diversity or quality, etc.). AI has a vital need for data, without which it cannot develop: it is impossible to build an AI without first training it on existing cases, and the larger the training universe, the better the content generated by the AI.