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JPMorgan (JPM) Plans to Go Global With Digital Retail Bank

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JPMorgan (JPM - Free Report) intends to go global with its digital retail bank. Sanjiv Somani, the U.K. chief executive of Chase, said in an interview with Reuters, “We want to be international, starting with the UK.”

It must be noted that JPM entered the U.K. market with the launch of its digital-only consumer bank under the Chase brand in September 2021. Following the year since the launch, the company holds more than £10 billion ($10.8 billion) in customer deposits in the country and has processed nearly 92 million card and payment transactions.

The deposit numbers are almost similar to what Goldman Sachs' (GS - Free Report) online-only bank Marcus garnered in the first 17 months in the U.K. Marcus by Goldman had amassed approximately £13 billion in deposits. Thus, GS is expected to give tough competition to JPMorgan in its plan to expand retail banking in the U.K. market.

Notably, the U.K. market has seen several failed attempts by banks to challenge the dominance of major local banks that include Barclays, Llyods and NatWest. Also, recently, Citigroup (C - Free Report) announced plans to exit the retail banking operation in the country, to focus on personal banking and wealth management businesses. This is a strategic fit for the company, given that the U.K. is a key wealth hub for Citigroup and a significant global center for its institutional business.

On the contrary, JPMorgan intends to double its employee count in the retail banking unit to almost 2,000 in the U.K. within two years. Likewise, the company will expand its scope of business from current and savings accounts by rolling out lending products, likely beginning with a credit card by 2023-end. The bank is also planning to integrate its investment business Nutmeg (acquired in 2021) into Chase.

Somani added, "You have to look at a ten-year view. If you look at anything shorter it will not lead to the right conclusion ... The retail banking revenue pool is in the trillions, even outside the U.S."

Although the venture is expected to record a loss of $450 million this year (reiterating the guidance provided in the May Investor Day conference) and cumulative losses exceeding $1 billion over several years before breaking even in 2027-28, JPM seems confident of eventually succeeding.

Somani further noted, “The idea is in the medium term we want to be a full-service bank,” while adding there is no immediate plan to roll out branches. Notably, JPM wants to replicate this digital-only banking model internationally.

Earlier in September 2022, Reuters reported that JPMorgan is preparing for overseas retail expansion and in this push, it is planning to hire a team of bankers in Germany. While Somani declined to comment on any plans related to Germany, JPM has become one of the largest advisory banks in the country in recent years.

To better align with customers’ needs, JPMorgan has continuously been moving toward digitizing operations. These efforts are expected to keep supporting the bank’s profitability and boost market share.


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