J.P. Morgan Chase released its Q1 2026 Earnings early last week (see the earnings call transcript here," and one of the main discussions during the Q&A involved a new AI tool to allocate cash. Wolfe Research's Steven Chubak comments, "So maybe to start on the AI cash tool, which, Jamie, you commented on in your letter. There's been lots of focus on this particular ... launch given that this is a tool which could potentially result in some consumer deposit pressure as well as drive some impact on increased competition [and] higher deposit betas. I was hoping you could just speak to how you see deposit competition unfolding as similar smart tools become more widespread." (See our April 17 News, "Schwab Says AI a Tailwind, Not a Threat to Cash Sweeps on Q1 Update," and our April 16 Link of the Day, "Morgan Stanley Q1 Call: AI & Sweeps.")
JPM Chase CEO Jamie Dimon responds, "Yes. It's a great question, and obviously, there's early stages for this particular product. So you have to look at it literally segment by segment, how people manage their money, how they want to manage their money. People are pretty astute at it, particularly the higher net worth. They have tons of choices. They often have money at many different places. So the question for us is, how can we make it easier for them to manage their money in a way they're comfortable. Most of you on this call, you have in your mind, how much days in a checking account and then you write a ticket to a money market fund or a deposit account, something like that. And that's all we're trying to do."
He continues, "And we provide great values to people. If you're a customer of J.P. Morgan, I remind people, if you have this product, you have ATMs, you've got branches, you've got advice, you have instant payment systems like Zelle. So we look at the whole basket. How we can do a better job for the client? And yes, it may squeeze some margin somewhere and create more competition somewhere, that's life. Jeff Bezos has always said, 'Your margin is my opportunity.' And I kind of agree with that. We're trying to look at the world from the point of view of the customer, what more can we do with them. And this is really early stages. And as you know, there's tons of competition out there for the money."
CFO Jeremy Barnum adds, "The only thing I was going to add to that, it's sort of understandable that this has gotten attention because it has ... 'AI' in it.... But as Jamie says, ... competition for deposits has always been very intense. It continues to be intense, and we have both external and internal competition from higher-yielding alternatives and people sort of optimize that, and that's part of running the business. And also as Jamie just alluded to, this thing is like kind of not even live yet, and it's ... targeted at a very small subset of the client base, particularly clients with investments where we think there's an opportunity to take a larger share of the investment wallet as part of this. So ... it's understandable the amount of interest that it's gotten, but I think the right way to think of it is sort of as an experiment right now."
When asked about digital assets and stablecoin, Barnum responds, "There's like so much to say on the stablecoin front. Obviously, there's a lot of like legislative and regulatory stuff going on. I think ... your question is a little bit more about sort of long-term impact on the payments ecosystem. So I guess, through that lens, I would actually start with the wholesale business and talk about all of the innovation that we've done in sort of modernizing payments through Kinexys and the way that some of that is starting to play out and giving a lot of our customers kind of exciting new features like programmable money and different hours and the associated tokenized deposits and all that type of stuff."
Jamie Dimon's recent "Chairman and CEO Letter to Shareholders," which first mentioned the AI cash allocator tool, contains segment titled, "We continue to bring all our clients, regardless of size, best-in-class money management tools." The letter explains, "We have continued to grow our Wealth Management business through our branch bank model, J.P. Morgan advisors and Self-Directed Investing. In total, client investment assets in this area rose 17% in 2025 to $1.3 trillion. In 2026, we intend to make it much easier for clients to automatically move money from their regular checking account to higher-yielding brokerage products and vice versa so they can maximize yield while managing day-to-day cash flow. It won't require multiple steps to trade, clear and transfer cash between accounts -- our Smart Cash capability will do it for them. Eventually, AI will allow clients to predict cash flow needs and anticipate upcoming bills, doing their budgeting for them."
In other earnings news, BNY, or The Bank of New York Mellon Corporation also released its Q1'26 earnings last week. (See the Q1 transcript here.) CFO Dermot McDonogh states, "Average deposit balances increased by 3% sequentially, reflecting 2% growth in interest-bearing and 6% growth in noninterest-bearing deposits. And average interest-earning assets were up 2% quarter-over-quarter. Cash and reverse repo balances were flat.... In Clearance and Collateral Management, investment services fees increased by 19%, reflecting broad-based growth in collateral balances and clearance volumes. Average collateral balances ... increased by 18% year-over-year, reflecting higher market activity and growth on the back of a robust environment for financing with U.S. treasury securities, strong money market fund balances and increasing client demand for noncash collateral."
He comments, "Ahead of the central clearing mandate for U.S. Treasuries, we are engaging with central counterparties and our clients, and we're delivering innovative solutions from across BNY that help them find new ways to access the market, clear transactions and manage collateral and margin. In the quarter, we also saw strong growth in clearing volumes, reflecting net new business wins, particularly in international clearance and from expanding wallet share with existing clients doing more with BNY."
Asked about the need for tokenization of assets, BNY CEO Robin Vince responds, "Look, I don't think the world needs everything tokenized. But there's no question that global financial market infrastructure is transforming and moving towards more of an always-on operating model. And so that's not just about blockchain technology immediately replacing traditional systems. It's about the two things working in concert and in some cases, just being able to unlock new possibilities that haven't been possible before without the always-on operating model."
He explains, "So look, we're in the business of moving, storing, managing money, creating interoperability, all of that stuff is stuff that we do today. And so what we're doing is we're advising clients to use the right tool for the job.... If they want to do real-time payment systems in the United States, we've got real-time payments in the United States. And same thing is true in Europe. They're actually even more advanced, which is why stablecoin usage in traditional financial markets hasn't really taken up as much in Europe. Although if you go to an emerging market and they've got high inflation, then the benefit of that 24/7 dollar-based stablecoin actually has quite a lot of advantages to sidestep what otherwise would be inflationary friction."
Vince then says, "So it's very much about the case. And what is the BNY strategy? Ours is to be a bridge and to be in both places. So we're doing business with traditional clients who frankly would like us to help them with their careful selection of what they should do in the digital assets market. So we're helping clients being able to launch new funds. Maybe they want to launch a new share class for those people who are very focused on digital assets or maybe it is a Bitcoin custody for clients who want to be able to launch an ETF, and we've had one of those recently that we announced with Morgan Stanley. So if you look at these different types of innovation, we are helping the clients sort of bridge into the new stuff. And frankly, the new clients, the ones who are really, really digital asset native, they need a lot of traditional capabilities as well."
Finally, Vince adds, "They need cash management. They need investment management. They need custody. Stablecoin providers would need all of those types of things. So we've invested across this ecosystem. We've stood up a bigger team together with our Head of Product and Innovation and Digital Assets to really make sure that we are able to deliver against these different use cases.... As you point out, money market funds essentially work pretty well. But when you're talking about the loans market, the commodities market, there are a lot of opportunities to bring things deeper into the financial system and actually improve them from where they are today."
