The news: JPMorgan’s IT teams will reorganize along product lines, enabling them to operate more like startups, per Business Insider.
That includes the addition of 25 “mini-CEOs” who will lead their shares of the bank’s 50,0000 technologists “like heads of startups.”
What’s the plan? In an interview with Business Insider, Monika Panpaliya, the head of JPMorgan's global technology-product office, contrasted “banks encumbered by legacy systems and hierarchy” with the “customer-centric, agile organization” that JPMorgan’s IT org wants to become.
Panpaliya expects the reorganization will take two to three years.
Context: In the competitive landscape surrounding financial services—crowded with fintechs, Big Tech, and nonbanking brands making innovative use of tech—JPMorgan’s adoption of agile processes and prioritization of tech updates is necessary for continued innovation and growth.
Will it work? Like independent startups, many internal startups also fail at a rate of between 50% to up to 90%. And internal startups require protection to maintain their separate identity and their desirable startup mentality. The control-focused culture of a large, well-established incumbent firm tends to absorb or reject any competing counterculture.
Also unlike a startup, JPMorgan answers to shareholders. Their recent criticism of the firm’s massive tech spending and opacity about line items likely put CEO Jamie Dimon on the defensive in his annual letter to shareholders. It will take more than a few letters to appease that crowd for the entire two- to three-year reorg rollout.