It's not easy to get a job at J.P. Morgan when you graduate. In 2016, J.P. Morgan hired only 2% of graduate applicants to its investment banking division (IBD). While 50 graduates are chasing each J.P. Morgan graduate job in IBD, however, far fewer are chasing each J.P. Morgan technology traineeship.
In the bank's 2016 annual report, published yesterday, Matt Zames, J.P. Morgan's chief operating officer, said there were just 10 applicants for every position on J.P. Morgan's technology program last year. The implication is clear: technology positions at J.P. Morgan are five times easier to get into than IBD jobs.
This makes sense. J.P. Morgan spends $9.5bn a year on technology - around 17% of its total costs and it needs people to manage that. At the same time, banks everywhere are abandoning their pursuit of finance graduates in favour STEM students. At Goldman Sachs, 37% of last year's hires were STEM majors and at Deutsche Bank 23% of last year's graduate intake went into technology jobs. All banks are chasing the same pool of technology students, and those students need to be persuaded away from pure tech firms and then retained once they come through the door.
J.P. Morgan has a plan for addressing this technology hiring challenge. Firstly, it's hiring-in senior technologists from outside the banking industry (a third of its senior technology hires didn't have banking experience last year.) Secondly, it's automating the coding process. Last year Zames said 120,000 developer hours were saved using "automated code scanning", which automatically checks code for faults before implementation. If each developer works a 50 hour week, this implies that the bank eliminated the need for 55 development jobs. More cuts are coming: in future Zames says more than 90% of the bank's software should be delivered through, "end-to-end automation."
The faster J.P. Morgan tries to alleviate its need for technologists though, the faster that need grows. Zames also noted that the bank needs to spend heavily on cybersecurity, that data is becoming more important and that machine learning is the future. As we reported in February, J.P. Morgan hired Microsoft's Geoffrey Zweig to head its new machine learning team. Zames said the bank is already using machine learning to analyze legal documents and identify potential investment banking clients based on an analysis of past activity, market conditions and financial data. J.P. Morgan also needs technologists in its markets division, where Daniel Pinto, chief executive of the corporate and investment bank, noted that 83% of trading in products like FX now takes place electronically.
While finance graduates queue round the block for graduate positions in M&A or sales and trading, banks like J.P. Morgan are therefore doing their utmost to usher tech students towards their opportunities. It may not be easy to get a tech job in an investment bank (10% still isn't a great acceptance rate), but it's damn site easier than getting a job in the old-fashioned front office.