Good morning,
Finance and artificial intelligence are not like oil and water. There are areas where the two mix, like expense reports. But when it comes to generative AI applications like OpenAI’s ChatGPT, a financial institution takes a pass.
There were reports this week that JPMorgan Chase & Co. was restricting employees from using the ChatGPT chatbot. The firm’s mandate was not issued in response to any specific event, but as part of standard controls over the use of third-party software, the Telegraph first reported. JPMorgan did not immediately respond to my request for comment.
Launched by OpenAI in November, ChatGPT is a chatbot that can answer questions and generate content on any topic imaginable, even writing articles. It is trained to follow language and thought patterns like humans. (Read more about OpenAI founder Sam Altman here.)
To discuss ChatGPT in the workplace, I had a conversation with Vikram R. Bhargava, an assistant professor of strategic management and public policy at the George Washington University School of Business, who conducts research on AI and the future of work.
“I think many of us, including those working in finance, were stunned by ChatGPT’s performance when we first started playing around with it,” says Bhargava. “Some employees and even banks might be tempted to use these tools to make their lives a little easier,” he says. For example, he asked it to create a relevant Excel formula for a modeling task that an analyst or collaborator could potentially run, he explains. But not knowing exactly how the technology works “creates a little uneasiness when you’re relying heavily on it,” he says.
“The thing about banking, of course, is that it’s a very highly regulated industry, and this technology is also new to regulators,” says Bhargava. With that in mind, Mira Murati, chief technology officer at OpenAI, said in a recent interview with Time that regulators need to look at ChatGPT and govern the use of AI in a way that is “aligned with human values.”
“I don’t know the exact reasons behind JPMorgan’s decision, but it seems reasonable to me,” says Bhargava. “This technology is evolving rapidly. One of the difficulties is – what might be true for ChatGPT as it is now might not be the case three months from now.”
JPMorgan is no newbie when it comes to AI. The bank was recently ranked #1 in data intelligence startup Evident’s AI Index, the first public benchmark of major banks for their artificial intelligence maturity. The index includes the 23 largest banks in North America and Europe. JPMorgan spends $14 billion annually on technology, about half of which is for investments, the company said in an announcement.
“Being a leader in AI and knowing how to use AI responsibly can sometimes require the company to stop using the technology at hand,” says Bhargava.
Michael Schrage, research fellow at the MIT Sloan School Initiative on the Digital Economy, spoke to finance leaders at Fortune’s CFO Collaborative event in January about the power of generative AI in finance. I asked his opinion on the limitation reported by JPMorgan.
Schrage says he’s not sure how OpenAI currently manages, collects, and analyzes “prompts” (how to get ChatGPT to do what you want). However, he suggests that prompts could be an issue for a bank worried about privacy rules, compliance and proprietary processes. Prompts that are too detailed could inadvertently reveal information that the bank or its customers would rather not share, says Schrage.
“Just as Google and Bing know what subjects, topics, and names are being searched, OpenAI is similarly likely to track the level of detail and specificity of prompts,” he says.
Again, Schrage isn’t sure how OpenAI handles and tracks prompts, but says, “It’s easy to envision and implement ways in which prompts could be anonymized, aggregated, masked, and shielded to minimize exposure of sensitive information and at the same time.” to receive good ‘generative advice’. and insight.” I contacted OpenAI to ask for prompts, but got no response.
Many CFOs are already cautious and experimenting with AI. And it will take time for them to feel comfortable integrating ChatGPT, Alexander Bant, research director for CFOs at Gartner, recently told me.
What would make financial institutions more open to ChatGPT? “You need a little more certainty to know how using this technology interacts with the current regulatory environment,” says Bhargava. But maybe there are some things a company can experiment with without getting reprimanded by the Securities and Exchange Commission?
“Let’s say there’s a new hire on your team who might not write the clearest and most concise emails,” explains Bhargava. “So using ChatGPT could allow for clearer communication.”
The application of ChatGPT in finance is undecided, but generative AI is going nowhere.
Have a good weekend. Until Monday.
Sheryl Estrada
[email protected]
Big thing
Hyperproof, a SaaS-based compliance and risk management company, has released its 2023 IT Compliance and Risk Benchmark Report. The company found that security, compliance, and risk management professionals were more concerned with short-term, immediate threats than with larger decisions such as long-term security issues. Respondents indicated that cybersecurity risk (36%) was their top concern, followed by third-party risk (29%) and a lack of support and resources for IT risk and compliance (24%). The study also found that organizations are poised and poised to improve their risk and compliance management processes in the years to come.
go deeper
Here are a few Fortune weekend readings:
“The housing market correction has already caused homeowners to lose $2.3 trillion,” by Lance Lambert
“These are the top cybersecurity startups to watch in 2023, according to VCs,” by Lucy Brewster
“The ‘free money’ tech investments are over and the ‘old economy’ is becoming the big winner, according to Bank of America,” by Will Daniel
“These 5 Sleep Habits Could Add 5 Years to Your Life, Experts Say,” by L’Oreal Thompson Payton
leaderboard
Here’s a list of some notable moves this week:
Sandeep Singh Aujla has been promoted to CFO, effective August 1, at Intuit Inc. (Nasdaq: INTU), the global financial technology platform that makes TurboTax, Credit Karma, QuickBooks and Mailchimp. Aujla has held senior finance positions at Intuit for seven years and is currently the SVP of Finance for Intuit’s largest business unit, the Small Business and Self-Employed Group (SBSEG), and for Intuit’s technology organization. Michelle Clatterbuck, who has served as CFO since February 2018, plans to step down as CFO effective July 31.
Johanna Ritter was promoted to CFO at Cargill, a global food company that provides agricultural and financial services. Knight currently serves as Cargill’s acting CFO. Prior to this role, she was vice president of finance for Cargill’s agricultural supply chain business, including marine transportation and the World Trade Group. Prior to Cargill, Knight spent 10 years at General Mills in finance, marketing and corporate leadership roles, including P&L responsibilities. She has also held senior finance positions at Wachovia.
Robert Higginbotham was appointed interim CFO of Foot Locker, Inc., effective March 1, pursuant to the company’s Form 8-K filed February 21. Higginbotham will assume this role in addition to his current duties as SVP of Investor Relations and Financial Analysis, a role he assumed in December 2022. The company continues to seek a replacement for current EVP and CFO Andrew E. Page, who will step down on February 28. Higginbotham previously served as VP of Investor Relations.
Ryan Clemens was promoted to CFO at SelectQuote, Inc. (NYSE: SLQT), an insurance agency. Clement was appointed interim CFO in May 2022. Before joining SelectQuote in January 2022 as SVP of financial planning and analysis, Clement served as CFO of Sifted (formerly VeriShip). Prior to Sifted, Clemen spent seven years at Edelman Financial Engines where he held various senior finance and operations positions.
David Rudow became CFO at Unite Us, a software company that enables cross-industry collaboration. Rudow will lead the finance organization Unite Us. Most recently he was CFO at nCino and took the company public in 2020. For more than 20 years, Rudow has held senior leadership positions, including SVP at CentralSquare Technologies and senior analyst positions for several leading investment banking and asset management firms.
Kevin Schubert has been appointed CFO of Rubicon Technologies, Inc. (NYSE: RBT), a digital marketplace for waste and recycling, effective immediately. In addition to his current duties as President, Schubert will now oversee Rubicon’s end-to-end financial operations. Prior to serving as the company’s President, Schubert was Rubicon’s Chief Development Officer. Prior to joining Rubicon, he held senior and consulting positions at public companies, most recently as CFO of Ocean Park Group.
overheard
“I have every respect for that [Fed Chair Jerome] Powell, but the fact of the matter is we’ve lost a bit of control over inflation.”
— said Jamie Dimon, CEO of JPMorgan Chase, in an interview during CNBC’s mid-term report.