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JPMorgan (JPM) Weighs Buying Starling Bank, Focuses on Digitizing
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Per a report from The Times, JPMorgan (JPM - Free Report) is mulling to acquire Britain-based online-only bank, Starling Bank Ltd. If the deal goes through, it will be the first big merger transaction between a well-known global bank and a start-up in the country.
Starling Bank is a digital bank founded in 2014. It offers checking accounts, business banking, money transfers, and other related services on both Android and iOS.
As JPMorgan plans to launch consumer bank in the U.K. early next year, the deal (if finalized) is expected to complement its strategy. With nearly 1.8 million accounts, £4 billion ($5.2 billion) in deposits and £1.5 billion ($1.9 billion) of loans as of Oct 31, 2020, Starling Bank is likely to provide the company a sound platform to begin operations.
Remarkably, Starling Bank became the first among the digital banks in the U.K. to break even. In October 2020, it generated operating profit of £0.8 million ($1.1 billion). Going forward, the company expects to remain profitable “on a monthly basis as it continues to grow and gears up to scale across Europe.”
Notably, Llyods Banking Group (LYG - Free Report) has also shown interest in buying the firm for further strengthening its technology and digital offerings.
For JPMorgan, it will be a tough competition in the digital banking space in the U.K. Several local FinTech players and large traditional banks like HSBC Holdings (HSBC - Free Report) and Barclays are looking to expand digital offerings. Also, Goldman Sachs’ (GS - Free Report) online-only bank Marcus poses a risk to the company’s expansion efforts.
In the United States, JPMorgan has more than 50 million digital banking consumers. Yet, the bank faced a setback in digital expansion initiatives when it had to close the online-only bank — Finn — in June 2019 due to poor customer response.
Despite these hurdles, JPMorgan is expected to continue with its efforts toward digitizing operations to better align with customer needs, which has further gained traction amid the coronavirus pandemic. These efforts are expected to support its profitability and boost market share amid a low interest rate environment.
Shares of JPMorgan have rallied 23% in the past six months, outperforming the industry’s rise of 18.6%.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
JPMorgan (JPM) Weighs Buying Starling Bank, Focuses on Digitizing
Per a report from The Times, JPMorgan (JPM - Free Report) is mulling to acquire Britain-based online-only bank, Starling Bank Ltd. If the deal goes through, it will be the first big merger transaction between a well-known global bank and a start-up in the country.
Starling Bank is a digital bank founded in 2014. It offers checking accounts, business banking, money transfers, and other related services on both Android and iOS.
As JPMorgan plans to launch consumer bank in the U.K. early next year, the deal (if finalized) is expected to complement its strategy. With nearly 1.8 million accounts, £4 billion ($5.2 billion) in deposits and £1.5 billion ($1.9 billion) of loans as of Oct 31, 2020, Starling Bank is likely to provide the company a sound platform to begin operations.
Remarkably, Starling Bank became the first among the digital banks in the U.K. to break even. In October 2020, it generated operating profit of £0.8 million ($1.1 billion). Going forward, the company expects to remain profitable “on a monthly basis as it continues to grow and gears up to scale across Europe.”
Notably, Llyods Banking Group (LYG - Free Report) has also shown interest in buying the firm for further strengthening its technology and digital offerings.
For JPMorgan, it will be a tough competition in the digital banking space in the U.K. Several local FinTech players and large traditional banks like HSBC Holdings (HSBC - Free Report) and Barclays are looking to expand digital offerings. Also, Goldman Sachs’ (GS - Free Report) online-only bank Marcus poses a risk to the company’s expansion efforts.
In the United States, JPMorgan has more than 50 million digital banking consumers. Yet, the bank faced a setback in digital expansion initiatives when it had to close the online-only bank — Finn — in June 2019 due to poor customer response.
Despite these hurdles, JPMorgan is expected to continue with its efforts toward digitizing operations to better align with customer needs, which has further gained traction amid the coronavirus pandemic. These efforts are expected to support its profitability and boost market share amid a low interest rate environment.
Shares of JPMorgan have rallied 23% in the past six months, outperforming the industry’s rise of 18.6%.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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