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JPMorgan Chase will open the first overseas retail bank in its 222-year history next week, with the launch of a digital-only lender that aims to shake up the UK banking market.
Sanoke Viswanathan, head of JPMorgan’s new international consumer division, said America’s largest bank will invest heavily to make Chase a serious force in the UK before potentially expanding to other countries from Europe and Latin America.
âThis is a very big strategic commitment from a business perspective,â he said in an interview at the bank’s headquarters in Canary Wharf. “We’re going to spend hundreds of millions before we break even and get to a place where it’s a sustainable business, and we’re in no rush.”
Chase will initially only offer checking accounts with a rewards program, but intends to expand rapidly into areas such as personal loans and investments, and eventually even mortgages.
âUnder the current conditions, there is a massive oversupply of mortgages and many providers. . . but to be a full-service bank and to have the trust of consumers over the long term, it’s an important product line, âhe said.
The new bank, named Project Dynamo during its secret development over more than two years, has often been compared to Marcus of Goldman Sachs, which launched in the UK three years ago. However, while Marcus quickly collected billions of pounds in savings, Goldman has so far used the deposits to fund its investment banking operations, rather than creating a larger product set.
In contrast, Viswanathan said Chase aims to enable customers to “do all of their banking with us and not have to bank with other people” within three to four years. He added, however, that the company had not set a specific target for the number of customers and would not be “slavish” to the idea of ââreaching profitability by a certain date.
In June, JPMorgan agreed to buy UK robo-advisor Nutmeg, and Viswanathan said he would consider further acquisitions as it expands.
The arrival of Chase brings a well-endowed newcomer to an increasingly competitive UK market. Digital-only startups such as Monzo, Starling and Revolut have poached millions of customers from traditional banks in recent years, but have been slower to develop lending capabilities and have at times struggled to keep up with regulatory requirements in the past. as they grow.
JPMorgan hopes its huge tech budget and lack of a branch network will make it more efficient than legacy lenders, while its regulatory expertise and strong track record will give it an edge over start-ups.
However, the big banks have a mixed record when it comes to launching new digital brands. JPMorgan abandoned its first effort, a national brand called Finn, after just a year where it struggled to gain customers or differentiate itself from the bank’s main Chase network. In 2020, UK bank NatWest closed its new Bo bank after less than six months.
JPMorgan’s reputation in the UK was also affected earlier this year by its involvement in the unpopular plans of a football super league. General manager Jamie Dimon was forced to apologize for “misjudging” the fans’ reaction.
Chase has around 600 employees in the UK, 500 of whom are new hires. Prior to launch, the bank ran a pilot program with 6,000 employees for six months.
Viswanathan has repeatedly stressed that Chase is willing to be âpatientâ with his latest venture, having first considered expansion over a decade ago.
“We are committed to this country for the long term,” he added. âWe didn’t make this decision on a whim.