Capstone Chapters 1-5 final

J.P. MORGAN CHASE & CO: BANKING TECHNOLOGY
1
Author Note
This Capstone paper was prepared for the Spring 2015 semester of the Capstone General
Management course GEB 4935, taught by Dr. Roger Blair of Palm Beach State College.
J.P Morgan Chase & Co: The Rise of Banking Technology
Christopher Danny
Palm Beach State College

J.P. MORGAN CHASE & CO: BANKING TECHNOLOGY 2
Abstract
This research paper explores all materials required to reinforce the rapid change on the banking
infrastructure due to the increase of technology. Also, this paper discusses the real threat of the
changing environment of the business banking model due to the increase of mobile and digital
technology. And with these advancements, JP Morgan Chase & Co and their competitors may
have hard time adapting to the new landscape. The paper discusses the imminent closures of
banking locations due to increase usage of mobile banking apps. The purpose of this research
analysis will cover trends of banking technology affecting the industry. The paper also discusses
the internal and external factors that affect the company covering strengths, weaknesses,
opportunities, and threats. Including, a comprehensive look at the Porter’s Five Forces model to
understand how opportunities and threats affect the banking industry. Also, the research
significance will bring relevant facts to support the thesis and provide recommendations for JP
Morgan Chase & Co.
Keywords: banking infrastructure, mobile and digital, banking technology

Chapter 1: Research Proposal and Introduction
Introduction to the Organization
J.P. Morgan Chase & Co is one of the oldest prominent financial institutions residing in
the United States. With over $2.4 trillion in assets J.P. Morgan Chase is the leader in global
financial services with operations serving in over sixty countries and approximately 260,000
employees currently serving. J.P. Morgan Chase & Co is segmented into different financial
services for consumers, commercial and small business banking, investment banking, asset
management, and private equity. As one of leaders in the financial industry the company serves
millions of consumers, from small businesses to corporate giants, and government clients (J.P.
Morgan, 2015).
Founding date. With over 216 years of rich history dating back to 1799, J.P. Morgan
has become one of oldest and largest financial services company the world has ever seen
dominating corporate finance. John Pierpont Morgan the financier, philanthropist and founder
came from a family of bankers which he learned the banking industry from his father Junius
Spencer Morgan who laid the foundation for J.P. Morgan. In 1871, J.P. Morgan started his own
private banking company which was named J.P. Morgan & Co (J.P. Morgan , 2015).
Essential events. In 1893, the United States railroads was the primary source of
transportation for that time and J.P Morgan & Co became the primary financier for it.
Approximately eight years after, J.P. Morgan & Co becomes the world’s first billion dollar
company ever in economic history. J.P. Morgan was able to buy over industrialist and
philanthropist Andrew Carnegie’s steel producing plant and thereby combining thirty-three other
steel producing factories to create United States Steel Corporation making it the largest steel
factory in the United States in the late 1800’s. Also, J.P. Morgan was essential to the creation of

the corporate giants still existing in today’s corporate world, such as General Electric, ATT&T,
and U.S. Steel Corporation (J.P. Morgan, 2015).
Historical products. John Pierpont Morgan founded J.P. Morgan & Co with the
intention of providing top notch financial services for bank institutions, government, commercial
and small businesses, investment banking, and also private equity and asset management for
consumers from its initial founding. Today, J.P. Morgan Chase & Co has approximately $2.4
trillion in assets around the world, while also holding the title of having the largest bank holding
in the United States with over 5,630 branch locations respectively. Also, J.P. Morgan Chase &
Co is the nation’s primary leader in mortgage lending and the highest issuers of credit cards
among their financial rivalries with over $128 billion in credit card loans around the world
(Biesada, 2015).
Entry into new business lines. With regards to new business lines, technology is the
core business strategy where innovation and financial risk management are key roles that play
hand-in-hand with each other. Over the years, J.P. Morgan Chase & Co understands the
importance of the external technological effects on their financial service company. According to
the J.P. Morgan (2015) website the company was named “Best in Class: Mobile Banking” for
2011 for their mobile apps. Through their mobile banking apps technologists have developed
other means of financial services other than banking. Chase QuickPay offers customers person-
to-person transactions and Chase QuickDeposit which allows the customer to remotely deposit
checks through their mobile device. Also, J.P. Morgan “Apps Store” provides the customer with
internal mobile apps and online browser to easily access their mobile bank accounts through a
cellphone or tablet device (J.P. Morgan, 2015).

Industry competitors. In the financial services industry there are many competitors,
however J.P. Morgan is still the top leader and holds the competitive advantage in the financial
sector industry. According to Hoover’s (2015) company profile of J.P. Morgan Chase, they have
a total annual of sales of $106.28 billion. However, their competitive landscape consists of three
top competitors Bank of America with a close lead of $101.70 billion in annual sales, Citigroup
with $92.54 billion in annual sales, and Wells Fargo with $88.07 billion in annual sales.
Section II. Statement of the Problem
The son of J.P. Morgan, J.P. Morgan, Jr., was known for saying that his bank should be
known for “doing only first-class business, in a first-class way” and that statement still resonates
to this day (J.P. Morgan, 2015). J.P. Morgan Chase & Co has dominated the corporate finance
industry in providing high quality service for their clients beating their top competitors and
having the competitive advantage in the financial markets. With regards to online banking J.P.
Morgan has the technological advantage through their banking apps, but with the rise of online
scammers and fraud it comes at a cost to their competitive advantage and brand image. Also, the
increase of online banking such as digital money will only lower their financial services and
inflate the banking system overall. Customers using their smart phones and tablets for “self-
service” banking would in fact have a consequential negative impact for J.P. Morgan Chase
branches across the region. Overall, the real threat is the changing environment of the business
banking model due to the advancements of technology thereby changing how consumers and
banks do business. Corporate banks such has J.P. Morgan Chase and their banking competitors
may have a hard time adapting to the new landscape of banking technology.
In response to this problem, the research being conducted will provide different strategic
analyses which may bring positive or negative findings. Also, by conducting independent

research this will address the issues J.P. Morgan Chase & Co faces as technology changes the
landscape of the banking industry and if corporate banks can handle the threat of change.
ResearchQuestion
Given the rapid evolution of technology in today’s business market, is J.P. Morgan Chase
& Co able to handle the swift threat of change from technological advancements and the use of
digital money and mobile banking apps? Also, will this technological change impact the banking
infrastructure?
Hypothesis
As stated before, J.P. Morgan Chase & Co is facing new conditions of rising technology
in today’s markets, this will have a negative impact on the financial institutions and lower their
financial services sector. J.P. Morgan Chase will face difficulties in adapting to the new
landscape of technology this problem might harm their market share in the banking industry if
they don’t embrace the technological change.
ResearchSignificance
The research being conducted is vital for J.P Morgan Chase & Co because it will bring an
awareness of external and internal factors such as technological change in the banking landscape
and the rise of digital money including mobile apps. Also, the banking business model will be
further addressed and analyzed to avoid negative impacts to the company’s profits and title as
leader of financial institutions.
Purpose
This research paper will demonstrate a thorough analysis that will assist J.P. Morgan
Chase & Co to understand the underlying trends of banking technology and how it may affect
their long term goals. Also, it will address a comprehensive SWOT analysis to further reinforce

the research proposal and identify key strengths, weaknesses, opportunities and trends. Also,
with these findings it will address positive or negative effects on J.P. Morgan Chase and if the
company can respond effectively to the new landscape of banking technology while still
maintaining a large market share in the finance industry.
Data Collection/Research Methods
The research proposal will comprise of qualitative research. The primary sources of
information conducted by the researcher will come from online databases such as Hoover’s
Premium, J.P. Morgan Chase company website and banking competitor company profiles. Also,
peer-reviewed journal articles, and financial reports to help further the research proposal. Finally,
terminology from the supplemental textbook “Strategic Management: An Integrated Approach,”
will be utilized to help further explain theories and concepts for the purpose of research.
Chapter Summary
The research proposal will examine and analyze J.P. Morgan Chase & Co. The overall
company history and founding leaders have been presented. Also, crucial events to the
foundation of J.P. Morgan and prominent status of the company have been addressed. The
statement problem addresses the overall change of banking technology threatening the banking
infrastructure which will impact all major financial institutions in the United States and affect
J.P. Morgan Chase market share. Also, the high usage of online banking and mobile apps would
have an impact on J.P. Morgan Chase branches and change the banking environment in how
customers and bankers conduct financial transactions and services. The data collection portion
addresses how the research paper will be conducted and research methods.

Chapter 2: Literature Search
Section I. Literature Search
Everyday financial transactions are being processed at this very moment. Financial
transactions aren’t just about numbers, but however information which is hard financial data to
be processed to information for customers to understand. With technology on the rise banks may
have to change their internal infrastructure. The threat of technology to the banking infrastructure
is not an immediate threat but a long term threat. Also, the lack of communication between top-
level executives can hinder the ability for potential profit.
External Threats. A threat is defined as elements in the external environment that can
harm the profitability and veracity of the company’s business (Hill, Jones, & Shilling, 2015, p.
45). The external threat to J.P. Morgan and its banking competitors is technological
advancements in mobile banking apps. The technological services being offered to consumers is
at the forefront with self-service options rather than customer to teller interaction. According to
Bessant (2015) technology will not eliminate bank branches and employees, but however it will
change how banks provide business services to consumers. However, bank closures are on the
increase due to the high usage of electronic devices, JPMorgan Chase lost approximately forty-
five branches in the Chicago area alone (Cox, 2014). With mobile banking it eliminates branch
locations and time consumption for the customer.
Lack of Communication. Another issue is the lack of communication between corporate
executives in the organization. Communication problems among separate functional hierarchies
or departments grow more separately from one another and communication becomes extremely
difficult because of differences in goal orientations of each functioning department (Hill, Jones,
& Shilling, 2015, p. 418). Corporate banks such as J.P. Morgan Chase and their executives need

to understand the importance of technology and that technologists are integral for solving
business problems and serve customers effectively (Bessant, 2015). Also, effective
communication between the Chief Information Officers and top executives is crucial in
providing business strategies to shrink the gap between the top and lower management levels.
Researchon Changing Infrastructure on Banks. The way how consumers do banking
and also how employees provide services is changing. Face-to-face communication with bank
tellers have changed to video screens for certain major banks. And the traditional nine to five
work hours will be going away for some bank employees. This allows customers to have more
available time to take care of their financial transactions or banking needs at any time (McMillin,
2015). Banks need to realize that they’re dealing with a new generation of banking customers
than the previous generation. This could be a lack of research and identifying key components in
the changing nature of the banking industry. The rise of technology with today’s young,
technically savvy consumers are used to the availability of quick access from their mobile apps
on their smart phone and tablet devices rather than waiting in line at the bank (Waxman, 2015).
To reach this niche market large corporate banks, specifically J.P. Morgan Chase needs to keep
their image relevant to the younger generation by harnessing the advancements of technology.
The rapid revolution of technology such as cloud computing, mobile app payments, and big data
play a key role into acquiring new customers especially the younger generation into the financial
service market’s increasing profitability. Also, with the advancement of mobile technology it has
put pressure on the expansion of the banking infrastructure. This resulted in reducing the amount
of employees and branch locations needed making it cost effective for the banks (Searl, n.d.).
ResearchStrategies and Challenges of the CIO. The role of the Chief Information
Officer is to provide business insights and responsibility of information technology. The

advancements in technology has had an adverse effect on cyber threats on financial information.
Also, the use of social media outlets such as Facebook on mobile technology has put the role of
the Chief Information Officer to the forefront over the decades not only affecting J.P. Morgan
Chase but its competitors as well (Yurcan, 2011). However, with the position of the CIO there
are many challenges they face such as wide gaps in communications between the CIO and top
executives such as the CEO. For a tech savvy CIO it can be difficult to communicate business
insights with top executives when they don’t understand the terminology or language used by the
CIO (Ray, 2015). With an effective strategy in communication it is vital for both the CIO and top
executives to develop a strong working network. According to Linda Ray (2015) of the Houston
Chronicle she states that, through a strategic planning structure and communication strategy with
the CIO and top level executives, it can increase profits and reach company goals while reaching
a broader market share.
Comparative Company Analysis
Corporate banks need to understand that the increase of e-commerce banking will change
the banking infrastructure and affect the banking industry overall. Banking branch locations have
been on the decline since the financial crisis of 2008, and U.S. banks have been increasing
mobile and online services while closing down locations. J.P. Morgan Chase competitor, Bank of
America Corp. has had a nine percent increase of all checks deposited by customers using their
smartphone or tablet devices to snap a picture of their checks to deposit them in their accounts
(Chaudhuri, 2014). Bank of America noticed the increase in mobile banking customers and
invested approximately $500 million in its mobile app service. However, the adverse effects of
increased mobile transactions has led to more bank closures. In 2013, the number of Bank of
America locations went from 5,478 to 5,151 and could fall under 5,000 total banking branches in

2014 (Camhi, 2014). With the changing technological landscape competitors like Bank of
America have no choice but to adapt to the revolution of mobile apps and close branches.
Another major bank facing the same issue is PNC Bank where they plan to change their three
hundred branches to teller-less employees and remodel their banking infrastructure because of
the high demand of technology. Installations of “self-service” screens has lowered the
infrastructure costs for PNC Bank. Their strategy consists of changing the retail experience of
banking and invest into banking electronically. PNC Bank believes as a whole it will cut costs
and lower the amount of employees needed (Fleisher, 2014).
Chapter Summary
The literary search for Ch. 2 discusses the terminology of external threats and lack of
communication references which came from the “Strategic Management: Integrated Approach”
textbook. The literary search further explains how technology including mobile apps are forcing
bank closures and thereby changing the business banking infrastructure. Also, in the literary
search, the research findings concluded that there is lack of communication or language barrier
between the Chief Information Officer and top-level executives such as the Chief Executive
Officer. For example, the CEO and other top-level executives may not understand the
terminology used by the CIO, therefore they must work together as a network to solve this issue.
The comparative analysis of JP Morgan Chase competitors included Bank of America and PNC.
Both competitors are facing the same issue with regards to the rise of mobile technology and the
adverse effects of bank closures. However, only PNC is trying to maintain their branch locations
by changing their internal structure to a full electronically serviced bank with reduced
employees.

Chapter 3: Organizational Operations and Strategies
Current Company Operations
Financial Aspects
JP Morgan Chase & Co had accumulated $106.28 billion in sales from 2013 with a one
year sales growth of 1.76 percent. Also, the 2013 net income totaled to $17. 92 billion with a one
year net income growth of 15.79 percent. The return on assets for the company is 0.89 percent
and return on equity is 10.10 percent (Hoover's, 2015). There was also a decline in revenue and
net income after taxes in 2013. JP Morgan Chase & Co declining trend began since 2009 and has
been attributed to decreasing interest income and lower trading income. Also, legal and federal
issues which have lowered profitability overall.
Figure 1. JP Morgan Chase & Co Income Statement illustrates both annual revenues of $106.28
billion and net income after taxes from 2009 to 2013 on a billion dollar scale (Hoover's, 2015).

Figure. 2 JP Morgan Chase & Co Annual Balance sheet reveals total assets have increased from
December 2009 to December 2013. Total liabilities have increased from December 2009 to
December 2013. Numerical values in shareholder’s equity has increased from December 2009 to
December 2013 (Hoover's, 2015).
Total Assets ($, million) Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009
Current Assets
Cash 355,822.00 175,537.00 144,881.00 49,240.00 89,436.00
Net Receivables -- -- -- -- --
Inventories Assets -- -- -- -- --
Other Current Assets -- -- -- -- --
Total Current Assets -- -- -- -- --
Net Fixed Assets 14,891.00 14,519.00 14,041.00 13,355.00 11,118.00
Other Noncurrent Assets -- -- -- -- --
Total Assets ($, million) 2,415,689.00 2,359,141.00 2,265,792.00 2,117,605.00 2,031,989.00
Liabilities Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009
Current Liabilities
Accounts Payable -- -- -- -- --
Short-Term Debt -- -- -- -- --
Other Current Liabilities -- -- -- -- --
Total Current Liabilities -- -- -- -- --
Long-Term Debt -- -- -- -- --
Other Noncurrent Liabilities -- -- -- -- --
Total Liabilities 2,204,511.00 2,155,072.00 2,082,219.00 1,941,499.00 1,866,624.00
Shareholder's Equity Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009
Preferred Stock Equity 11,158.00 9,058.00 7,800.00 7,800.00 8,152.00
Common Stock Equity 4,105.00 4,105.00 4,105.00 4,105.00 4,105.00
Total Equity 211,178.00 204,069.00 183,573.00 176,106.00 165,365.00
Shares Outstanding 3,756.11 3,803.95 3,772.69 3,910.29 3,941.96
Exchange: NYSE: JPM
Fiscal Year-End: December
All amounts in millions of US Dollars except per share amounts.
Hoover's
Annual Balance Sheet Statement
Return to Hoover's
JPMorgan Chase
D-U-N-S Number: 047675947
Primary Industry: Banks & Credit Unions

Competitors. Based on the competitive landscape, JP Morgan Chase & Co maintains the
title of top financial services provider among their competition. JP Morgan Chase surpassed
other corporate banks such as Bank of America with a close lead behind JP Morgan Chase. And
Citigroup and Wells Fargo trailing behind.
Figure. 3 The 2014 Annual Sales are illustrated and the 2014 Net Profit Margin for JP Morgan
Chase, Citigroup, Bank of America, and Wells Fargo (Hoover's, 2015).
Organizational Hierarchy & Structure
The company operates in five segments which include Corporate and Private Equity,
consumer & community banking, Asset management, commercial banking and corporate &
investment banking. Corporate and Private Equity consists of the Treasury and Chief Investment
Officer and other corporate officers to execute the firm’s capital structure plan. Consumer &
community banking consists of the financial services being provided through personal banking
services at branch locations and other services such as ATM’s, mobile and online banking. Also,
Asset management provides wealth and investment management to all clients (Reuters, 2015).
The Chairman of the Board, President, and Chief Executive Officer for J.P. Morgan
Chase & Co is James Dimon who has served as CEO since 2006. The other corporate officers

consists of Marianne Lake, the Chief Financial Officer and Matthew Zames as the Chief
Operating Officer. Also, Kristin Lemkau the Chief Marketing Officer and John Donnelly as
Head of Human Resources (Reuters, 2015).
Human Resources
JP Morgan Chase & Co believes that managing talent of its employees is critical to the
success of the financial services firm. The Human Resources team selects qualified personnel to
provide business support to assist in strategy & planning development, and project management
(J.P. Morgan, 2015). JP Morgan Chase has many complex products in all of their business units
and all employees are trained to interpret information for the customer. The high level skills
required in the finance industry comes with more than average compensation for the average US
worker (Hoover's, 2015).
Legal & Ethical Issues
The current legal issues that JP Morgan Chase & Co faces are the huge investigations and
lawsuits and a $6 billion trading loss. The financial firm was also accused of misconduct in how
it marketed mortgage backed securities which they sold these investments in the prelude of the
2008 financial crisis. The company would make mortgage loans then bundle them to sell them to
investors instead of keeping them on their books which was unethical (Rexrode & Gordon,
2013). Also, JP Morgan Chase & Co paid $2.6 billion to the U.S. government and Madoff
victims to resolve civil and criminal allegations in which the company failed to respond to
Bernard Madoff’s Ponzi scheme. Madoff’s money scheme was the largest Ponzi scheme in U.S.
history which inevitably was tied to the JP Morgan brand and other competing financial firms
(Henry & Flitter, 2014).
Technology and Information Systems

JP Morgan Chase & Co understands the importance of information technology. The
firm’s most innovative business technologies consists of JP Morgan Chase’s mobile and digital
services’. The technology used through the Chase mobile app allows the consumer to deposit
personal checks using their smartphone without the need to step foot into a bank. Also, the online
service referred to as Chase QuickPay allows the customer to send and receive money from
anyone, anywhere. JP Morgan Chase ranked in third place in the financial services industry
group and other large global financial services companies (JPMorgan Chase, 2011).
Industry Environment
The critical issues JP Morgan Chase and their competitors would face are the
vulnerabilities of economic slowdowns and dramatic market fluctuations. This would affect the
overall future of the competitive success of the financial industry (Hoover's, 2015). The finance
industry is vulnerable and susceptible to economic losses or slowdown which adds to an all –
time low in consumer confidence with the recent financial recession.
Corporate and Business Strategies
Missionand Goals
With over 200 years of hard work JP Morgan Chase has had the same mission statement,
“to be the best financial services company in the world” while emphasizing on its long lasting
heritage as a financial services company (JPMorgan Chase & Co , 2015). The goals JP Morgan
Chase would like to achieve is to develop a world-class franchise in every aspect of their
business. Also, they would like to create a powerful brand which is attributed with integrity,
quality and above all transparency.
Corporate Strategy

JP Morgan Chase business strategy is to use their reputation as a brand name and long
expanded history of the company. By carrying out these business strategies JP Morgan Chase
execution involves the employees by acting upon problems quickly for customers and follow-up
to meet commitments (JPMorgan Chase & Co , 2015).
Unrelated Diversification
The company is segmented into four major business segments including private equity
and corporate segments. Also, their nonbanking unit makes JP Morgan Chase a multifaceted
conglomerate because of their diverse operations in the financial industry. The corporate level
strategy used by JP Morgan Chase is based on a multi-business model from their banking to
nonbanking units to increase their overall performance and profitability (Hill, Jones, & Melissa,
2015). Overall, their goal is to strengthen their business model which increases the performance
of all business units and divisions for JP Morgan Chase by employing their organizational
competencies.
Competitive Strategies
JP Morgan Chase & Co has deep roots in the financial industry and throughout the years
they have merged with other financial firms such Chase Manhattan Corporation. Four years after
acquiring Chase Manhattan Corporation in 2004, with the combined company they acquired
Chicago-based Bank One. Also, in the midst of the financial crisis in 2008, JP Morgan Chase
purchased the failing company Bear Stearns and Washington Mutual adding well over 225,000
employees and tripled revenues to $105 billion in the recession (Wherry, 2011).
Investment Strategies
According to Hoover’s (2015) in March of 2014, JP Morgan Chase agreed to sell its
physical commodities business unit for $3.5 billion to Switzerland’s Mercuria Energy Group

Holding SA and also decided to stop selling student loans to simplify the structure of JP Morgan
Chase. Within the next year JP Morgan Chase decided to sell some of its portfolio investments to
One Equity Partners a private equity firm. Also, in addition to JP Morgan Chase investment
strategies’ they believe in integrating investment management teams to enhance its multi-
business solutions where the investment strategy is to invest in infrastructure and technology
(Comtois, 2015). The investment team is in charge of looking at the competition and making
sure they can outperform the competitors with the latest technology.
Chapter Summary
The organizational operations and strategies for Chapter 3 briefly discusses current
financial aspects of JP Morgan Chase including the income statement and balance sheet. Also,
the financial aspects covers JP Morgan Chase competitors in their financial industry such as
Bank of America, Citigroup, and Wells Fargo. The chapter discusses the organizational
hierarchy and structure covering all five segments of JP Morgan Chase’s business units. Also,
the top-level officers such as the CEO and CFO are addressed. The Human Resources aspects
and legal dilemmas of the company are discussed in which the company was accused of financial
misconduct of bundling mortgage loans. Also, the inappropriate ties with Bernard Madoff who
conducted the largest Ponzi scheme in the U.S. A summary of the technology and information
systems used by the company is discussed and the various digital and mobile services used by
consumers. The industry’s environment factors briefly covers the external factors affecting the
industry such as economic slowdowns and federal regulations.
The corporate and business strategies of Chapter 3 defines the company’s mission and
goals and briefly covers the corporate strategy. Also, the company’s strategy uses unrelated
diversification to increase overall value and profitability in all business units. Finally, the various

competitive and investment strategies are discussed which helps strengthen JP Morgan Chase
mission and goals as a financial services company.
Chapter 4: SWOT Analysis
Organizations who want to be successful must establish an effective business plan. In
order to do so they must create an SWOT analysis to identify potential strengths, weaknesses,
opportunities and threats to the company. The central purpose of the SWOT analysis is to
identify key strategic exploitations of external opportunities in the surrounding industry,
preferably the finance industry for JP Morgan Chase & Co. Also, with any successful
organization there are threats from either external and internal factors or competitors in the
industry. Furthermore, there can be internal and external weaknesses to the organization that
must be identified (Hill, Jones, & Schilling, 2015).
Internal Weaknesses and Strengths
Leading. JP Morgan Chase & Co has faced many struggles during the recent financial
crisis of 2008 and legal settlements. However, having survived the financial industry meltdown,
JP Morgan Chase & Co. CEO, Jamie Dimon has been praised for his leadership in steering the
company away from toxic securities and unethical business practices (Rouston, 2009).
Furthermore, the company adhered to JP Morgan Chase ethical code of conducts and
transparency of financial statements. Jamie Dimon was praised for his straight-talking
management style of leadership which guided the company while other competitors have failed
such as Lehman Brothers and Bear Stearns due to unethical business practices.
Traits, skills behaviors and effectiveness analyzed. Strong leadership in any business is
essential for any leader wanting to be successful. JP Morgan Chase & Co has faced many
difficult challenges, but with a great sense of company culture and excellent leadership while

fostering an open environment is key to a successful organization (Dimon, 2014). The traits and
skills required to be an effective leader is that it takes discipline, which means holding business
reviews, team meetings and constantly striving for innovative ideas with a strong sense of work
ethic. Also, many leaders lack the initiative to resolve matters swiftly. By acting with a fortified
sense of change, a leader can fight internal business politics and take responsibility and
ownership of the matters at hand (Dimon, 2014). While other financial competitors failed due to
the unethical business practices being conducted such Lehman Brothers, JP Morgan Chase & Co.
CEO Jamie Dimon has expressed the importance of the transparency of sharing information and
the importance of honesty in all business aspects to avoid another financial crisis (Dimon, 2014).
Motivational effectiveness analyzed. Jamie Dimon has explained that leaders should not
lose interest with their employees and as leaders must get out on the field regularly to touch base.
Also, the CEO of JP Morgan Chase & Co has explained that anyone in a meeting should feel free
to speak his or her mind without the fear of retaliation from higher management (Dimon, 2014).
Jamie Dimon further explains that the best leaders treat all people equally no matter of economic
status or origin with respect from clerks up to top-level management. The purpose of all
employees working at JP Morgan Chase & Co is that everyone needs to assist and help each
other at the company because the sole purpose of the company is to serve clients and others not
themselves (Dimon, 2014).
Evaluation of communication effectiveness. JP Morgan Chase & Co offers prominent
services for their customers through their extensive retail networks. Through their effective
communication throughout their retail financial services it helps meet the financial needs of their
consumers and small businesses. JP Morgan has the third largest branch network in the world

offering consumers the appropriate networks to meet their financial needs (JP Morgan Chase &
Co, 2015).
Controlling. To measure performance strategic control systems are developed to assess
the overall evaluation of the company. Top-level management and mangers at all levels must
develop measures to evaluate the integrity of the company (Hill, Jones, & Schilling, 2015). JP
Morgan Chase & Co understands the importance of their corporate governance policies which is
provided by their Board of Directors which is comprised of balanced and diverse group of
leaders and highly independent individuals. The Board of Directors duty is to govern on behalf
of the stockholders and investors with the main responsibility of the oversight of management
and the firm’s stockholders (JP Morgan Chase & Co, 2015).
Quality controls in effect. The primary responsibility of the management team at JP
Morgan Chase & Co is to ensure that there is an effective system of controls which is reasonably
designed to safeguard the assets and income of the corporation. Also, to ensure that all integrity
of the financial statements is transparent. Furthermore, it is the management’s responsibility to
maintain compliance with JP Morgan Chase corporate ethical standards, plans and procedures
that adhere to federal law and regulations (JP Morgan Chase & Co, 2015). Also, JP Morgan
Chase & Co has formed a group of one hundred fifty employees to help clients and stock traders
in making better financial decisions. This new team will track trades across asset classifications
and electronic trading platforms in which they will look for opportunities and identify threats to
the bank’s overall market share (Glazer, 2014).
Six-Sigma. The Six-Sigma methodology is a primary tool to increase the overall
reliability of a product and improvement the quality-control system. However, for JP Morgan
Chase & Co it is used to describe the unexpected events in high volatility of financial markets. A

financial assets volatility is measured as the standard deviation or sigma (JP Morgan Chase &
Co, 2015). Six-Sigma Productivity and Quality has become JP Morgan Chase & Co top strategic
initiatives since the early 2000’s. The focus on Six-Sigma was not only lowering expenses but
however, revenue maximization and overall customer satisfaction. Currently, Six-Sigma has
since evolved into lean design for Six-Sigma practices, Activity based costing, Kaizen and
Project management (Marx, 2015).
ISO 20022 Capabilities. The ISO 20022 XML standard is a rapidly growing way of how
large corporates integrate payable, treasury, and receivable applications with their suppliers,
buyers, and banking partners globally (JP Morgan Chase & Co, 2015). The ISO 20022 system is
supported by banks and financial application providers world-wide. Also, the ISO systems is a
standard used by a large volume of client payment systems which is used globally.
Organization’s Information Technology. JP Morgan Chase & Co is constantly
innovating to make important investments to their technology platform. Their technological
innovation such as mobile banking has been named “Best in Class: Mobile Banking” for 2011
(JP Morgan Chase & Co, 2015). Another form of information technology JP Morgan Chase
possess is their “SWIFT” technology. SWIFT provides communications infrastructure, products
and services to all clients and connects approximately 9,000 financial institutions, securities
establishments and corporate clients in over two-hundred countries. SWIFT is used a
communication channel by JP Morgan Chase extensively to communicate with its corporate and
non-corporate clients. Its purpose is to aide in organizational reliability, improved liquidity
management, risk reduction and cost efficiency (JP Morgan Chase & Co, 2015).
Planning. Formal planning systems for any business is vital to ensuring making better
strategic decisions for the future. For a strategic plan to work, it is vital that top-level

management should not only focus on the current competitive environment but the future of the
competitive environment in its respected industry (Hill, Jones, & Schilling, 2015). Top-level
management must forecast what the organization might look like in the future, also top-level
managers should plan for worst case scenarios or “what-if” scenarios. Not only should top-level
managers forecast the future of the company, but also involve operating managers in the
planning process to see if any input can be used for the future of the competitive environment of
the organization. However, for JP Morgan Chase & Co with the intent of strategic planning
comes at a cost with the rise of technology and the risk of employee layoffs adversely.
Current plans implemented. With the increase of technology JP Morgan Chase is
reducing the amount of transactional employees at their branches and investing more heavily into
digital and mobile banking technologies to accommodate customers with more self-service
options to cut down on costs. However, the overall focus of JP Morgan Chase & Co is to trim
current employment costs and downsize its retail branch network (Heschmeyer, 2015). JP
Morgan Chase has been cutting expenses aggressively and cut approximately 12,000 employee
positions with an overall loss of 32,000 employee layoff since 2012 across its consumer business
sector (Heschmeyer, 2015). Also, JP Morgan Chase’s current plans is to take advantage of the
U.S. households that are living within their two mile Chase branches. They plan on shifting the
image of the banking branches into financial advice centers from simple consumer transaction
centers.
Weakness in Planning. JP Morgan Chase & Co understands the importance of investing
in technology which can boost profitability and overall efficiency and effectiveness of the
organization. However, these positive effects can have negative implications on employee
layoffs and the increase of cyber threats with the integration of digital and mobile banking

technology. JP Morgan Chase has the vision of the “branch of the future” in which fewer
employees will operate under with less square footage and greater automation (Solomon, 2014).
The company is following self-service trends of their customers while utilizing technology for
routine banking transactions with fewer employees needed. As a result the company plans to
close 300 bank branches or five percent of the total by 2017 while customers move to digital and
mobile banking to reduce costs over time (Sweet, 2015).
Weakness in Planning cont. The rise of technology offers vast amounts of information
and financial data in large volumes to anyone who has access to a smartphone or computer.
These large quantities of data whether it be personal accounts or confidential corporate
information is vulnerable to hacking. JP Morgan Chase lacked the planning in constant
surveillance of their servers which gave easy entry for hackers to gain secure information. The
computer breach at JP Morgan Chase was the largest intrusion to any U.S. bank. And the
problem would have been bypassed if the bank had installed a simple security measure to an
overlooked data server in its large network (Goldstein, Perlroth, & Corkery, 2014). JP Morgan’s
security team neglected to upgrade one of its vast networks which lead to the theft of JP Morgan
employee login information.
Organizing. JP Morgan Chase & Co may have some drawbacks when it comes to
planning, however their organizational structure helps promotes overall profitability and market
share. All successful businesses organizations implement the use of organizational designs which
compromises of how a company should create and combine organizational structure, control
systems and company culture (Hill, Jones, & Schilling, 2015). JP Morgan Chase & Co
implements an organizational structure which integrates corporate, commercial, investment, and
private banking.

Figure 1. Analyzes JP Morgan Chase & Co organizational structure of six departmental
structures. Prepared by Hoover’s Premium company report.
Salary and stock and employee benefits. JP Morgan Chase & Co. offered Jamie Dimon
the Chief Executive Officer a seventy-four percent raised to $20 million back to its normal pay
scale before the 2008 financial recession. His compensation includes $18.5 million in restricted
stock, while board members decided to keep the CEO’s executive pay below the previous peak
levels after criminal and regulatory investigations (Moore & Son, 2014). The Chief Financial
Officer Marianne Lake received 80,346 shares of JP Morgan Chase & Co stock worth at $4.65
million and executive pay of $8,288,388.

External Opportunities and Threats
Figure 2. Michael E. Porter’s Five Forces Model framework evaluates the competitive
environment of an industry to identify opportunities and threats. Created by Chartered Global
Management Accountant, cgma.org.
Porter’s Five Forces examined. JP Morgan Chase & Co incorporates all five forces as a
competitive strategy in the finance industry. JP Morgan Chase has numerous competitors and it
would be assumed that their buyer power is high to keep up their competitive advantage over
their competitors such as Bank of America and Citigroup. Rivalry among their existing financial
competitors within the industry is used to gain a large portion of the market share by a means of
price, product design and incentives (Hill, Jones, & Schilling, 2015). Chase Bank offers “The
Chase Cash Back Advantage,” in which if the customer has their new mortgage payment
automatically deducted from a Chase checking account and get cash back up to $500 annually
for the life of the program. And the customer can either take the cash at the end of the year or

pay down towards the principal of the mortgage (Chase Bank, 2015). The threat of substitute
services is high among the financial industry, however JP Morgan Chase & Co is consistently
implementing new strategies to stay innovative and keep their competitive advantage. With
regards to barriers to entry, they are high for JP Morgan Chase with their differentiation of
business segments. Also, JP Morgan Chase & Co firm’s customers and suppliers have little to
any bargaining power, making the barriers to the industry extremely high and the overall
industry concentrated (Grosvenor, 2012).
Macro-environment Forces
The banking system is transforming quickly with government regulations such as the
U.S. Securities Exchange Commission, also the legislation of Dodd-Frank. Also, the
macroeconomic pressures such as the rapid revolution of technology and customer demand with
increased competition such as Bank of America and Citigroup are trailing behind. Changes in the
macro-environment has a direct effect on the Porter’s Five Forces thereby altering the strength as
well as the importance of the finance industry (Hill, Jones, & Schilling, 2015).
Global forces. Expansion of U.S. banks and financial brokers into foreign markets has
attracted more foreign investors to U.S. financial institutions and funds easier. The rise of
technology has made foreign investment securities exchanges more integral and accessible
allowing for more U.S. funds to have a more diversified portfolio in foreign investments. Also,
many foreign counterparts have more foreign investors in off shore accounts to avoid heavy U.S.
taxes (Hoover's, 2015).
Demographics forces. Banking customers are becoming more computer and
technologically savvy. In the banking industry, customers want the highest quality in technology
and a relationship with their banker for financial advice. Also, the significant demographic trend

in banking is the age demographics of their consumers and also shifts in wealth into younger
generations have been more predominant in overall trends (Kendler, 2006).
Political and legal forces. J.P Morgan Chase & Co including their competitive
counterparts have immense influence over the global economy. The Securities Exchange
Commission and other state and federal regulatory institutions have closely monitored with the
recent increase on regulation of financial firms from the financial crisis. Also, the U.S
government has increased the accountability of all financial firms that received an economic
bailout plan to avoid collapse (Hoover's, 2015). Such examples of federal regulation were Dodd-
Frank Wall Street Reform and the Consumer Protection Act. These regulatory bodies were
designed to provide greater transparency and increased oversight regarding financial practices in
the financial system. Also, incentives for individuals on a whistleblower program for unethical
business practices, and security law violations (U.S. Securities and Exchange Commission,
2015).
Technological forces. With the rapid evolution of technology it allows consumers to
engage in financial transactions without a broker needed with the advent of electronic trading
and “self-service” banking. The positive outlook of the internet allows firms to increase their
level of customer service by offering more access to products, services and information on any
digital format. Online information is more reliable with the integral use of internet networks used
to communicate with clients and employees with ease (Hoover's, 2015).
Evaluating the SWOT Analysis
JP Morgan Chase & Co faces many internal and external threats and opportunities in the
financial industry. Overall, the company has a strong brand image in the industry with strong
leadership, organizing and controlling. However, where they lack is internal and external factors

with regards to planning. The company has invested into technology with the emphasis of the
“branch of the future,” however they overlooked a simple security measure and financial
information was breached to due carelessness. The strategic planning internally for JP Morgan
Chase & Co needs to be focused on to keep the competitive advantage in the financial industry.
Chapter 5: Summary, Recommendations, and Conclusions
Summary
This research paper analyzed the internal and external factors that JP Morgan Chase &
Co has faced with the rapid revolution of technology and overall change of the banking
infrastructure and weaknesses in strategic planning with the rapid change of technology. JP
Morgan Chase & Co is not alone with large banking giants such has Wells Fargo, Bank of
America and Citigroup also face the same situation of the changing technological landscape in
the finance industry. The recent developments in technology have led to more layoffs of banking
employees with the increase usage of digital and mobile apps and less emphasis on the “brick
and mortar” style of banking. The research analysis of JP Morgan Chase & Co has concluded
that it lacks the planning required to keep ahead of the competitive landscape. While the brand
image and organizational culture of the company is affluent they lack planning with regards to
financial data in their servers and future of the employees with technology usage increasing.
Recommendations
Based on the research that was conducted the facts represented that advancements in
technology in the financial industry is here to stay and is changing the way how consumers are
conducting everyday banking transactions. Recent developments of mobile banking apps have
greatly reduced the need of a customer entering a bank and the number of transactions being
conducted in a “brick and mortar” bank. Technology provides the convenience on both ends for

the consumer and banking institutions such as JP Morgan Chase & Co. However, the company
needs to realize with the advancements in technology is changing the banking infrastructure with
banking closures across the country and less employees needed to operate them. With the change
of the banking infrastructure it is recommended that the company offer a personalized service
and offer a wide range of services such as tax preparation, accounting and legal services and this
change should occur in a short time frame to test the market. JP Morgan Chase & Co could then
help retain their employees and train them to expand on their skills to assist customers in the
financial services sector while halting banking location closures. Also, the company needs to
update their data servers with the increased volume of data which is vital to the company image
and security. It is recommended that JP Morgan Chase & Co invests more into technology to
reach a larger market share and change the branding image of banking locations to financial
advisement centers with the same need for banking tellers to operate them.
Conclusions
The methods of research used in this analysis to cover JP Morgan Chase & Co was the
company profile and financial records, online databases such as Hoover’s Premium, peer-
reviewed articles, journal articles, and government websites such as the United States Securities
Exchange Commission website. Also, financial reports such as Morningstar, Yahoo finance, and
NASDAQ were used in the process for the purpose of this research paper. Overall, JP Morgan
Chase & Co has a deep rich history in the financial industry and leads in the finance industry
over there competitors. JP Morgan Chase & Co has an affluent image in the finance industry
with a large market share over their competitors. The company knows the importance of
innovation and the rapid change of technology to further their expansion and profitability. With
regards to the company’s leadership, JP Morgan Chase & Co and other large banks have no

choice but to adopt to these recommendations over time to stay competitive in the rapidly
changing banking landscape. It’s no question of doubt that JP Morgan Chase & Co has to adapt
to the rapid revolution of technology forever changing how consumers conduct banking.

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