JPMorgan warns of risks to consumers who rely on AI agents

• Key insight: JPMorganChase executives believe the bank's investments and consumer relationships continue to give it a competitive advantage as new technology emerges.
• Expert quote: "It's going to be interesting to see how [AI] develops and what we ourselves offer there at some point, but when you take a really big step back from a competitive position, I think we really like our hand in no small part because of the multiple decades of investment in the branch network, the value proposition and the trust that customers have in us." — JPMorganChase CFO Jeremy Barnum
• What's at stake: Bank executives warned Tuesday that customers who share their banking credentials with AI agents may be responsible if the agents misuse their information or make unauthorized transactions.

JPMorganChase executives said Tuesday that third-party AI agents do not fundamentally pose new competitive threats to the bank, though they could introduce risks for customers who've started relying on them to take care of everyday tasks.

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Speaking on the bank's third-quarter earnings call, Chief Financial Officer Jeremy Barnum said the rise of AI agents could intensify competition for deposits and customer relationships. However, he said the underlying threats, such as customers seeking higher yields and fintechs offering better digital experiences, are not new to the bank.Barnum said JPMorgan believes that its investments and consumer relationships continue to give it a competitive advantage as new technology emerges.

"That doesn't mean we're complacent about it. We're spending a lot of time on it," he said. 'It's going to be interesting to see how the space develops and what we ourselves offer there at some point. But when you take a really big step back from a competitive position, I think we really like our hand in no small part because of the multiple decades of investment in the branch network, the value proposition and the trust that customers have in us."

As AI agents gain the ability to access customers' accounts and move their money, protecting customers remains the bank's "true north," Barnum said.

He noted that some services that move money on behalf of customers rely on credential sharing, a practice Chase has long opposed. "It's not secure, and so to the extent that we're able to block those, we are blocking them to protect customers and protect ourselves," Barnum said.

Barnum also cautioned that customers who share their banking credentials with AI agents could bear responsibility if those agents misuse their information or take unwanted actions.

Customers are turning to AI agents, such as Meta's Muse, launched in September, to automate tasks, including moving money between accounts.

"It's important that customers understand that if they give up their credentials to the agent, and the agent does something that they don't want, that's going to be on them, and that's sort of not an ideal state of things," Barnum said.

JPMorgan is working to develop ways for customers to use AI agents more securely, Barnum said, adding that trust remains an asset the bank has spent decades building.

Internally, JPMorgan is deploying AI across various workflows, though the financial benefits weren't yet apparent in the bank's third-quarter results, in part because of its size, Barnum said.

He said JPMorgan has also used AI to try to upgrade some legacy tools, though those efforts have not always worked as intended. Still, the bank is beginning to see what he described as "some really exciting opportunities for acceleration and productivity change."

It remains unclear how quickly those benefits will materialize, Barnum said, noting that some productivity gains will be offset by the cost of AI tokens.

"There's a lot going on," he said.

Third quarter earnings

For the third quarter, JPMorgan reported net income of $15.3 billion, up 6% from a year earlier. Despite the year-over-year increase in profit, the company fell short of analysts' expectations. Earnings per share of $5.57 were well below the $5.91 consensus estimate of analysts, according to S&P Capital IQ.

The bank's provision for credit losses totaled $2.7 billion, down from $3.4 billion a year earlier, but up from $2.5 billion in the previous quarter.

Markets revenue rose 15% to $10.3 billion, driven primarily by growth in equities revenue. Average deposits increased 8% year over year, while average loans rose 10%.

Net interest income, excluding markets, was $24.7 billion, up 6%, as a result of higher deposit balances and wholesale loan balances. In a prepared statement, CEO Jamie Dimon said the economy was fueled in the third quarter "by strong business investment and ongoing consumer spending."

He cautioned, though, that economic risks remain.

"However, large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface," Dimon said. "These forces may be manageable, but we remain prepared for a wide range of outcomes."

JPMorgan's noninterest expenses rose 12% to $27.3 billion, driven by higher compensation, including revenue-related pay and an increase in front-office employees. Higher brokerage expenses and distribution fees, marketing costs and technology expenses also contributed to the increase.

JPMorgan raised its full-year net interest income forecast to $106.2 billion, including markets, and $97.2 billion excluding markets. The updated projections were up from previous forecasts of $105.5 billion and $96.5 billion, respectively.

The bank also raised its full-year expense forecast to $108.6 billion, up from $107.5 billion last quarter, citing higher volume and revenue-related expenses.