After three years of developing the app and infrastructure behind it behind closed doors at its UK HQ in Canary Wharf, the U.S. banking giant JP Morgan Chase is to launch its UK digital bank Chase on Tuesday, September 21st. The app-only bank, which takes the same name as the Wall Street scion’s retail bank on its domestic U.S. market, is being released with the aim of taking significant market share from the UK’s traditional high street lenders.
Chase will initially launch with current account facilities but intends to quickly add savings, loans and other personal finance products. While Chase UK chief executive Sanoke Viswanathan said the parent bank JP Morgan will be patient and is realistic time will be needed to build up a strong base of account holders, But he also admitted the new business will only be viable if it succeeds in attracting “millions of customers over time”.
Those millions of customers will, in the majority, have to be poached from rival banks, both traditional high street names such as Lloyds and Barclays and the new cohort of digital-only challenger banks like Starling and Monzo. Fintech giants Revolut have also applied for a UK banking license and will add to the sector’s increasingly fierce competition.
Chase benefits from the resources parent JP Morgan Chase can throw behind its move to capture a chunk of the UK market. Exactly how m.uch is being invested in Chase UK has not been disclosed but is understood to be substantial.
The pre-launch business already employs 400 people in London, 200 in Edinburgh and another 250 in customer service centres based in India and the Philippines. That’s already more than most app-based banking start-ups with the first account holder still to be signed up.
The new UK digital bank is a priority for JP Morgan, with Viswanathan, who is also responsible for the parent bank’s international consumer growth initiatives, confirming the launch of the business
“is one of the top two or three things the bank is doing”.
The UK market is being seen as, if successful, a stepping stone for Chase to expand into Europe and then globally. But London has been established as the HQ of Chase’s international future. Viswanathan commented:
“London will be the global headquarters of something which could be far-reaching — the focal point of what the whole international digital bank will be in the future.”
The UK is seen as a good first market for Chase because of a customer base that has proven itself open to digital financial services and a forward-thinking regulatory regime that has supported encouraged the fintech sector’s growth. However, it is also acknowledged as a market where there is stiff competition and that Chase will be late to the party. As Viswanathan said:
“We know we have our work cut out to get customers to understand what Chase is all about. Arguably we have last-mover advantage.”
JP Morgan hopes success in the crowded UK market is still attainable for Chase thanks to a combination of the resources available to it through its parent bank and the start-up culture and associated ‘nimbleness’ it has tried to instil in the new business. The combination will, said the bank, offer UK customers “stability and innovation”.
JP Morgan and Viswanathan last year considered acquiring Starling to give Chase a head start on account holder numbers before deciding to start itself from scratch. But it did snap up robo-advisor platform Nutmeg in June for £700 million and has acquired around 75% of Volkswagen’s payments platform as well as committing £500 million of funding for landlord mortgages through LendInvest.
The latter deal is being seen as a potential precursor to a future foray into the current ‘buy now, pay later’ trend popularised by the Swedish fintech Klarna. Industry analysts believe the string of UK-based acquisitions and investment deals have been made with a probable long term strategy of integration with Chase.