JPMorgan Moves Across the Pond Into a Crowded Digital Banking Field 

For big U.S. banks, the path toward going fully digital lies across the pond.

JPMorgan, as noted last week, has set down roots, ramped up operations, and is making an all-in bet in the United Kingdom on consumers’ continued shift to digital banking.

With its digital bank efforts, JPMorgan, the second largest bank as measured in terms of revenue, bumps up, with the newly-christened digital retail bank Chase, against U.K. marquee names such as HSBC and also goes toe to toe with digital-only firms such as Monzo — and also Goldman Sachs, which launched its own digital Marcus bank in 2018.

Read more: JPMorgan to Debut Omniservice UK Digital Bank

All of these firms have the proverbial head start on JPMorgan, but it may be the case that digital banking is greenfield opportunity enough to let several players jockey to capture mind and (digital) wallet share.

It should be noted that the move marks the first steps JPMorgan is taking to launch its consumer operations beyond the states, and as reported, the financial services behemoth will start with checking accounts and then, eventually, move into lending and investments, among other products and services.

The bank is not starting from scratch — and as always, for any firm entering a new market, the debate is one of build versus buy. Here, we see that the initial efforts are to “buy.” As noted in these digital pages over the summer, JPMorgan said it would buy OpenInvest, a platform geared toward helping financial advisers streamline their operations and customize portfolios.

Read also: JPMorgan’s FinTech Spree Shows Investing Belongs To The Young

And earlier in the year the company bought Nutmeg, a U.K.-based robo-adviser.

Learn more: UK Wealth Manager Nutmeg To Become Part Of JPMorgan

The Future is Digital 

These moves — with more, surely, to come — point toward an acknowledgement that the future is digital, as consumers skew younger, as wealth is passed down to tech-savvy individuals and families. As Jeremy Barnum, CFO, said in the latest earnings call, “It wouldn’t really make sense to do international expansion in consumer when you think about that through the lens of a branch-based strategy. So if you imagine, going outside of the U.S. and opening branches in other countries and competing with the incumbents, just from a branding perspective, from an operating leverage perspective, we’ve never felt that, that was likely to be a successful strategy for us, and that hasn’t really changed.”

The expansion, the CFO continued, is one that, in the U.K. and in Brazil with the acquisition of C6, gives the company the “ability to … experiment a little bit.”

The difference right now is the ability to do that digitally.

As to the competitive landscape, Monzo has roughly 5.5 million account holders in the U.K., and Starling said it had 2.3 million accounts open as per an update over the summer.

The U.K. is of course what might be thought of as Ground Zero for open banking, where consumer-permissioned data allows FinTechs and banks to partner in the delivery of new financial services. It might be strategic, then, for JPMorgan to ink pacts with players in that new market to broaden its offerings with speed — especially if its initial savings and checking features are to gain critical mass. In the meantime, the neobanks will have to compete with a giant that has much, much deeper pockets. Competing on interest rates and rewards gets you only so far, and ultimately has a (negative) impact on margins.

In the meantime, there’s a bit of cross-pollination in the works. The British are coming, you might say. Revolut said at the beginning of the month that it would offer unsecured lines of credit and credit cards in the U.S.

Also read: Revolut’s US Credit Card Strategy Puts NeoBank Up Against New Challengers