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JPMorgan Chase will next week open the first overseas retail bank in its 222-year history, with the launch of a digital-only lender that aims to upend the UK banking market.
Sanoke Viswanathan, head of JPMorgan’s newly formed “international consumer” division, said the biggest bank in the US would invest heavily to turn Chase into a serious force in the UK before potentially expanding into other countries in Europe and Latin America.
“This is a very big strategic commitment from the firm’s standpoint,” he said in an interview in the bank’s Canary Wharf headquarters. “We will spend hundreds of millions before we get to break-even and get to a place where this is a sustainable business, and we’re not in a rush.”
Chase will initially offer only current accounts with a rewards programme, but intends to quickly expand into areas including personal lending and investment, and eventually even mortgages.
“In the current conditions there is a massive oversupply of mortgages and lots of providers . . . but to be a full service bank and have consumer trust over the long term it is an important product line,” he said.
The new bank, codenamed Project Dynamo during its secretive development over more than two years, has often been compared to Goldman Sachs’ Marcus, which launched in the UK three years ago. However, while Marcus quickly took in billions of pounds of savings, Goldman has so far used the deposits to fund its investment banking operations, rather than building a broader product set.
In contrast, Viswanathan said that Chase aimed to enable customers to “do all 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 customer numbers and would not be “slavish” about reaching profitability by a certain date.
In June, JPMorgan agreed to buy British robo-adviser Nutmeg, and Viswanathan said it would consider further acquisitions as it expands.
Chase’s arrival brings a well-resourced new entrant to an increasingly competitive UK market. Digital-only start-ups 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 sometimes struggled to keep up with regulatory requirements as they grew.
JPMorgan is hoping its massive tech budget and lack of branch network will make it more efficient than incumbent high street lenders, while its regulatory expertise and strong balance sheet will give it an advantage over start-ups.
However big banks have a mixed record of launching new digital brands. JPMorgan abandoned its first effort, a domestic brand called Finn, after only a year when it struggled to gain customers or differentiate itself from the bank’s main Chase network. In 2020, British bank NatWest shuttered its new bank Bo after less than six months.
JPMorgan’s reputation in the UK was also hit earlier this year by its involvement in the unpopular plans for a football super league. Chief executive Jamie Dimon was forced to apologise for “misjudging” how fans would react.
Chase has about 600 staff in the UK, 500 of which are new hires. Before its launch, the bank ran a pilot programme with 6,000 employees for six months.
Viswanathan repeatedly stressed that Chase was prepared to be “patient” with its latest business, having first considered the expansion more than a decade ago.
“We’re committed to this country for the long term,” he added. “We didn’t take this decision on a whim.”
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