JPMorgan takes on British rivals with launch of digital bank Chase By Reuters
© Reuters. In this undated handout photograph, Chase’s debit card can be seen. This photo was obtained by Reuters in September 2021. Chase/Handout via REUTERS
By Lawrence White
LONDON (Reuters) – JPMorgan (NYSE:) is challenging British rivals on their home turf with the launch on Tuesday of its long-awaited digital retail bank, Chase, as part of what the U.S. lender hopes will be a global expansion.
The launch marks the first foray into retail banking outside North America by one of the United States’ most dominant lenders, heaping pressure on British incumbents such as Lloyds (LON:), Barclays (LON:), NatWest and HSBC which are already battling low interest rates and upstart digital rivals.
“We have been watching in which markets customers are really ready to do their banking primarily through digital channels, and the UK frankly leads the way in this respect” said Sanoke Viswanathan, chief executive of the new Chase bank venture.
He said that the U.S. bank could expand its reach into Europe via this venture, should it be successful.
“This is a business that we are building not just for the UK but hopefully for the rest of the world, and there is a great confluence of talent here across the different product functions, so it’s a great place to build a global headquarters for this new business,” he said.
JPMorgan offers customers a range of introductory deals to lure them into signing up for their fee-free accounts. These include 1% cashback when they use debit cards and 5% interest on any small amounts that are rounded up and put aside in separate savings.
“With a strong technology platform, significant financial resources and a global brand name, JPMorgan could be a serious player in the UK retail banking space,” Nic Ziegelasch, Analyst at broker Killik & Co said.
Wall Street’s giant Wall Street enters British markets with slim margins due to low central bank interest rates, a long tradition of free current accounts and an environment that is more competitive than most other international markets. Customers in the UK are not required to pay anything for basic services.
“The market structure in the UK is such that you have to generate economies of scale, there are profits to be made but if you are subscale or have a high cost infrastructure you’re not going to make it work,” Viswanathan said.
JPMorgan follows Goldman Sachs (NYSE;), which snatched up billions in deposits in the United States when it opened its Marcus digital bank in Britain. It offered a 1.5% savings rate and a market-beating interest rate.
JPMorgan will compete against digital-only banks like Monzo. Monzo has attracted 5 million customers through its distinctive coral pink cards, user-friendly apps, and has struggled to make steady profits.
Viswanathan stated that the bank already has 500 employees in Britain and is looking to hire more staff as it expands its customer service teams.
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