JPMorgan Chase Enters UK Market With Digital-Only Bank

The launch this September follows Goldman Sachs’ UK launch of its digital offeringin 2018.

JPMorgan Chase is the second US bank in just three years to have aggressively launched a new digital bank offering in the saturated UK market.

The launch of Chase this September follows Goldman Sachs’ UK launch of its digital offering, Marcus, in 2018.

Yet Chase isn’t likely to become Marcus 2.0, so long as JPMorgan can position it competitively enough, says David Murphy, head of Financial Services, EMEA & APAC at digital-transformation consultancy Publicis Sapient. “Perhaps the Nutmeg proposition could be Chase’s answer to differentiation for an industry-beating product,” he says of JPMorgan’s recent acquisition of UK wealth management robo-adviser Nutmeg, for an undisclosed sum.

“JPMorgan’s descent on the UK retail banking market will inevitably put pressure on the big four—Barclays, HSBC, Lloyds and Natwest—as the UK’s fintech market continues to ramp up,” Murphy continues. “We’ve witnessed digital banks such as Revolut, Monzo and Starling steal millions of customers from the traditional banks over the past few years, and JPMorgan’s Chase may have its work cut out trying to persuade customers to make it their main bank. However, there is clearly appetite among customers. And some of the fintechs are now struggling to generate both revenue and profit, meaning there is still a gap in the market for a heavyweight name such as JPMorgan.”

Chase’s competitive cash-back and savings offerings will, according to Murphy, likely lure customers away from its already established rivals, including the big four, especially as it comes backed by the weight of the JPMorgan name. “With UK customers feeling the pinch right now due to higher inflation and unfavorable interest on savings, Chase’s initial deal could tempt customers from elsewhere with the promise of giving hundreds, maybe even thousands, of pounds back if they switch to Chase as their main current account.”

UK-headquartered Standard Chartered, meanwhile, is teaming up with Singapore’s National Trades Union Congress (NTUC) to launch its second digital-only bank in Asia, following the successful launch of Mox Bank in Hong Kong last year.

Big banks, with substantial tech budgets, are well placed to challenge the challengers. And to be ready to fight the battles ahead against big tech companies like Google and Amazon, banking-as-a-service platforms will help them both compete and collaborate moving forward.