JPMorgan Software Does in Seconds What Took Lawyers Many Hours
bloomberg.com
bloomberg.com
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
However, I've seen it argued both ways. I'd be interested to hear what others think on the differences in the CIO and CTO roles.
They might have VPs of Technology though (usually along with some other role, such as CIO).
Unfortunately, the distinction is usually lost on me too.
She is mentioned in the first section of the article...
You have just described my role. We're calling ourselves Emerging Technology Specialists for the time being.
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.
Managed warehouse lines, etc.
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.
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.
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.
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
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.
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.
The problem is that companies actually, legally steal money like that; I did not fraud anyone ever and yet I have to provide proof (which I already did 100 times; they have my passport copy, bank statements, where I live, know me for 15+ years etc (and have data on me for that time)) and then still smug (...) canned responses that 'this is the way it is'. But I have no recourse besides legal action which is usually not worth it. So I just have to suck it up. It's theft; I did not do anything. That is my gripe; outside internet, it would not stand. But luckily I left that all behind many years ago; this just brought it back in my head :) Sorry for ranting.
I'm all for automation, but not for bad automation. Google is still party to that in many ways; I am logged into Google / Gmail / Plus / Drive / Photos and do a search; I get a captcha request because I 'might be a bot', then I fill it correctly and it says my computer might be sending automated queries. IT IS NOT and it's just a disgrace to the company, when I am logged on as a very long term paying loyal user, that they cannot simply see 'oh, that's Tycho, let's not annoy him with stuff that he never does/did/will (and he uses Linux, is a programmer, uses Noscript so his laptop is very much not compromised) do and oh yeah he is logged in via 2-factor auth so it's him'. Boggles the mind. Not sure how you can defend it.
I'm not surprised Google closes their eyes and ignores false positives, your answer only confirms that.
Edit; not saying you work there so you know it, but if you do and can say, i'm curious :)
Turns out, there is some terror group with the same word in their name.
Also turns out, PP's "sophisticated" fraud detection will hold a payment for nearly a month, when a human looking at the transaction is going to figure out it is a false-positive from a bullshit system pretty quickly.
Also turns out that apparently terrorists are somehow still capable of functioning, despite the best minds of our generation writing these super-cutting-edge detection algorithms.
I have to imagine that there are members of the set of people who are terrorists and also stupid enough to type "for the greater glory of MyTerrorGroup!" in a PP comment field, but there can't be many. And guess what? This gets everyone thinking about what sort of scanning takes place. So in the interests of catching the two idiot financiers who do this, we're teaching everyone to Be Careful What You Say.
Which, come to think of it, is probably an outcome that some are not unhappy about.
Companies like PayPal aren't doing this because they honestly believe it will catch terrorism. They are doing this because the US government tells them to, and they risk onerous penalties for non-compliance.
"Aleph" is on that list as an alias of Aum Shinrikyo, the cult responsible for the Japanese subway Sarin attack in 1995.
These regulations are somewhat pointless in that the list is public so anyone on the list can easily find out the fact they are on it and use an alias / front company / etc which isn't – so they only catch the truly incompetent terrorist funder/sanctions-buster/etc. But I don't think we can blame companies like PayPal for the existence of government regulations like this–I'm not aware that PayPal, or any other major corporation, has lobbied for these regulations to exist–although if PayPal take a month to remedy a false positive, that is unacceptably slow and it is fair to criticise them for that.
The US government tells you to screen your transactions against their lists, and that due dilligence must be performed to investigate matches – https://www.bis.doc.gov/index.php/policy-guidance/lists-of-p...
If you apply your best efforts to following the US government's advice, but then unintentionally end up doing business with a denied party – they are unlikely to prosecute you, and any prosecution is unlikely to suceed. If you ignore their advice, and then end up doing business with a denied party – even if you never realised they were one – then negative legal consequences are much more likely.
Any US exporter (including overseas subsidiaries of US corporations) is required to obey these laws. Other countries have similar laws which must be obeyed as well. For a large global business, this can get very messy fast, which is why large businesses employ whole teams of people to manage this and use software to help them do it (many ERP packages incorporate this functionality).
And these laws don't say "report the transaction to the government but let it through anyway". The laws say "report the transaction to the government AND deny it". If you do the former instead of the later, you are likely both breaking the law and telling the government that you've done it, which is unlikely to end well for you.
From an end-user perspective, freezing the suspect transaction until an investigation can confirm it is harmless is unpleasant. But, from the company's viewpoint, if they don't take the time to do a through investigation of a suspect transaction, they are exposing themselves to significant legal risks.
(Disclaimer: I speak for myself, and these statements should not be taken as statements of my employer. I am not a lawyer and I don't work in the export control field.)
- your average of PP transfer amount per transaction is fairly low
- that single buyer / transaction was way over the usual average, possibly in the five-figures range
- the buyer paid PP with a credit card
With the last item, it begins to make sense: the dispution timeframe is 90 days (per FTC, https://www.consumer.ftc.gov/articles/0219-disputing-credit-...). Paypal might be considering a possible dispute in small amounts (maybe 100$) as "chump change" but doesn't want to be on the hook for getting 10k $ back from the seller if the buyer wants to do a dispute.
If I were a one-man-payment broker, I would do exactly the same. No way I'd accept such a liability, no matter how big or reliable your business is - it's not you who is the risk, it's the buyer who is a direct risk to my business because I'm at the interface with the CC issuing bank which will hit me with a negative 10k$ balance and lawyer fees to resolve the matter and get my account balanced.
But, thank the heavens, I live in Germany where we have way more transactions done using SEPA direct transfer (online direct payment, next to impossible to revoke except for technical errors or fraud, and even if it's only possible in 10 days) or SEPA debit, which does have revocations too, but unlike with CCs, the issuer banks usually punish the customer harshly for wrongful revocations.
You might see automated arbitration and evolution of contract language to facilitate that, but even given the strong laws regarding the enforceability of arbitration agreements the courts are still are the ultimate backstop and have to be able to read and understand a contract.
Basically, a law is void if an "average person of common intelligence" can't interpret it.
Examples: https://www.linkedin.com/in/mjwaitzman/ https://www.linkedin.com/in/amir-wasti-2964491/ https://www.linkedin.com/in/chuckcooper/ https://www.linkedin.com/in/mattstratton/ https://www.linkedin.com/in/aprahamian/ https://www.linkedin.com/in/greggawheeler/ https://www.linkedin.com/in/kamarajan/ https://www.linkedin.com/in/goodfellow/ 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.
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.
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.
https://www.forbes.com/sites/parmyolson/2016/06/28/this-teen...
I bet the bank is offloading to "the system" the niche find-and-seek jobs that interns did before.
Something like "find me all the contracts for mortgages in seattle between 1996 and 2004 on fixed rate loan and with guarantees in the same state, and delaware, and _____".
Then bundling all to a senior lawyer and then offloading to the CRM.
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
tl;dr: JP Morgan would be among the last companies I would trust with a software innovation reliant on new, breakthrough algorithms.
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.
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).
Any pointers?
See the original article, 8th paragraph (under the sub heading "Redundant Software")
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.
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.
so it looks like JPM might have written off "blockchain"?
To be fair, there are plenty of ways that blockchained systems can fail.
http://www.zdnet.com/article/microsoft-intel-banks-form-ente...