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Hi all, Julie here.

When JPMorgan reported earnings last week, you might have seen a lot of people look twice at one number in particular: $12B. That’s the amount the company plans to spend on technology this year. I don’t have a number for how much everyone trying to disrupt JPMorgan is going to be spending, but I’m betting $12B more. Even so, this isn’t the most important number from the earnings release. That number is $6B, which is the amount (of that $12B) that will simply go towards maintaining the tech stack.

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Ok back to JPM. Here's its CFO, Jeremy Barnum, on the earnings call:

“Turning to Page 14 [shown below]. In addition to all of our distribution-related investments, a critical foundational component of our strategy is technology, where we spend over $12B annually, with about half of that being investments or, as we sometimes call it, change the bank spend.

It's important to understand what's in the investment category. About half of that is foundational and mandatory, which includes regulatory-related investments, modernization and the retirement of technical debt, in addition to other key strategic initiatives to help us face the future. On the left-hand side, you can see some more detail around this. Modernization, which includes migrations to the cloud, as well as upgrading legacy infrastructure and architecture; data strategy that enables us to extract the value that exists in our proprietary data set by cleaning it and staging it in the right ways and then deploying modern techniques against it; attracting and acquiring top talent with modern skills; and a product operating model, which is, obviously, a popular buzzword these days.

But if you look through all that, it reflects the simple reality that the best products get delivered when developers and business owners are working together iteratively with end-to-end ownership. Underpinning all of this is our continued emphasis on cybersecurity to protect the firm and our clients and customers, as well as maintaining a sound control environment. Moving to the right-hand side. The other half of the investment spend is to drive innovation across our businesses and with our client-facing products.”

It’s wild to me that simply staying the same is going to cost that much, and only then do you get to start using money to “change the bank.” No wonder they have to charge overdraft fees, monthly fees etc! (Kidding…sort of)

One of fintech’s big arguments as to why they can beat the incumbents is that they don’t have to worry about the legacy systems (for the most part). I remember a few years ago, PayPal spent loads of money improving its tech stack so that it could ship products quicker and more efficiently. JPMorgan is talking a big game about winning at all costs and that it’ll do whatever it takes, but I’m not as sold on it as some executives might be.

From Jamie Dimon on the call:

“I've read about the competition. There's global competition, there's nonbank competitions, direct fiber lending competition. There's change street competition, there's pseudo competition, there's fintech competition, there's PayPal competition. There's a lot of competition, and we intend to win.”

I can’t help but think about how JPM has put itself in this position a bit? Which is surprising given that back in 2015, Dimon was already warning that “Silicon Valley is coming.” Some of it was certainly inevitable, but when you’re as big as JPM and still making yourself sound like an underdog against tech and fintech, something was missed along the way. Analysts weren’t too pleased on the call either. Not necessarily due to the dollar figures, but due to the lack of information they were able to get on the expected benefits to the investments. All Dimon and team basically said was they’d do what it takes to win. Ok, but how?

That’s the million (or billion) dollar question.

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Julie VerHage-Greenberg is the co-founder of Fintech Today, where she focuses on editorial content and brand. Prior to joining, she was Bloomberg’s first fintech reporter, covering Robinhood from before it was a billion dollar company, breaking the news that Plaid was acquiring Quovo, and interviewing executives on Bloomberg TV and at several large conferences.