JPMorgan Deals with Mosaic to boost Fixed-income Revenue
JPMorgan Chase & Co has announced its partnership with Mosaic Smart Data, a data analytics start-up, to help with its fixed-income sales and trading services, which the financial services holding company wants to make more profitable.
The multi-year deal, which was signed on Sunday, enables the bank to use Mosaic Smart Data’s tech division globally, according to the joint statement that the two companies released. JPmorgan’s fixed-income trading revenue has previously slipped last quarter.
MSX, which is the name of the analytics and machine-learning program, is now already used in JPMorgan’s rates trading. The technology makes the compilation of data from all desks and orders to convey a clear and accurate picture in real time to salespeople and traders, allowing them to predict market moves.
According to Matthew Hodgson, who is Mosiac’s chief executive officer, their latest deal effort is more concerned on the improvement of the salespeople’s performance instead of replacing them.
“Automation of tasks doesn’t equal automation of jobs,” said Hodgson during an interview.
Hodgson emphasized that the tool will be useful for a fixed-income salesperson to do his or her job more efficiently and provide better service.
JPMorgan generated $15 million in revenue coming from its fixed-income business last year. It is now among the plethora of banks integrating machine learning and artificial intelligence in capital market units.
“One of the key things the banks are starting to realize is that some of their biggest competitive advantages are locked within their data,” added Hodgson.
Better Informed Decisions
Banks are presently looking for solutions to deal with a liquidity fall in fixed-income markets. Preceding the economically devastating 2008 financial crisis, stricter capital requirements have been imposed, and this made it more expensive for banks to serve as market makers for corporate bonds, resulting to a slump in their fixed-income divisions.
During the quarter than ended last September, JPMorgan’s fixed-income markets revenue plummeted a boggling 27 percent.
Troy Rohrbaugh, who is JPMorgan’s global head of macro, said that Mosaic Smart Data’s technology could make the bank’s team “quickly make better informed decisions.”
Mosaic has previously partnered with JPMorgan’s “In-Residence” fintech start-up development program created in 2016. This program provides start-ups with access to the bank’s people, facilities, and systems for six months. Mosaic was the first to finish the program.
The technology provided by Mosaic predicts the client’s behavior, and will offer them ideas that are more favorable for them based on the gathered data.
“It’s the ability to measure the business at the empirical, rather than the anecdotal level. If I’m really interested to know that, for instance, asset managers are active in a particular set, I’d be very interested to know what maturity they’re contacting in,” said Hodgson.
Hodgson claimed that his idea came from his very own experience when he headed trading at large banks.
“The problem banks face is how do you run your business and understand everything in real time, whether it is research or inventory, and be able to anticipate rather than react to client needs,” said Hodgson.
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