JP Morgan Challenges British Rivals with Launch of Digital Bank Chase

London — JP Morgan is challenging its UK rivals by launching the long-awaited digital retail bank Chase on Tuesday as part of US creditors’ desire for global expansion.

The launch is the first non-North American retail banking move by one of the UK’s leading lenders, including Lloyds, Barclays, NatWest and HSBC, which are already fighting low interest rates and launching digital rivals. It puts a lot of pressure on incumbents in the UK.

Sanoke Biswanasan, CEO of the new Chase Bank venture, said:

If the venture is successful, he said, he could see US banks expanding to the European continent and globally.

“This is a business we are building for the UK as well as around the world, and there is a great confluence of talent across different product features, so it’s a great place to build a global headquarters for this. It’s a new business, “he said.

JPMorgan seduces customers to sign up for a free account with referral offers, such as 1% cash back on debit card spending and 5% interest on small changes rounded up from purchases, and saves them in another savings pot. increase.

Chase debit card
Chase’s debit card can be seen in this dateless handout taken by Reuters on September 20, 2021. (Tracking / distribution via Reuters)

Nic Ziegelasch, an analyst at broker Killik & Co, said:

Wall Street giants enter the highly competitive UK market with very thin margins caused by low central bank interest rates and the tradition of free current account balances, as opposed to most global markets where customers pay even basic services. I will enter.

“The UK market structure has to generate economies of scale and make a profit, but if you have a subscale or high cost infrastructure, you can’t make it work.” Said Viswanathan.

JPMorgan has set a 1.5% savings rate above the market at the time, following U.S. rival Goldman Sachs, who scooped up billions of pounds in deposits when it launched Marcus Digital Bank in the UK in 2018. ..

It also competes with digital banks such as Monzo, which attracts about 5 million customers with its special Coral Pink card and easy-to-use app, but struggled to turn it into a steady profit.

According to Viswanasan, the bank already employs about 500 staff in the UK and plans to add more as it builds a customer support team.

Lawrence White