Investment bank JPMorgan intends to establish a neobank in the United Kingdom under the Chase brand. This was reported by the SkyNews TV channel, referring to some tech-insudstry sources.
Sky News interviewees said the investment bank has already came to agreements with various cloud and digital service providers. In particular, agreements were signed with the commercial cloud Amazon Web Services and the technology platform of the ex head of Barclays bank Anthony Jenkins – 10xFuture Technologies.
There was no official confirmation of this information from JPMorgan. One of the channel’s sources believes that the project may be made public in January of 2021, but specific dates have not yet been approved.
JPMorgan’s consumer banking division operates primarily in the United States, with more than 50 mln customers. Launched in the UK, neobank is likely to offer its clients savings and checking accounts, as well as a range of standard banking and credit products.
British Chase is expected to be headed by ex head of the Financial Conduct Authority (FCA) Clive Adamson. JPMorgan’s entry into the market could provoke a price war among existing lenders who are already struggling to cope with a prolonged period of ultra-low interest rates.
The neobanks operating in the UK have suffered much from the consequences of the crisis caused by COVID-19. For example, the founders of Monzo are not sure if their company will be able to continue working. In the 2019-2020, Neobank’s losses reached $ 150 million, which is almost twice as much as a year earlier.
Iin June the neobank held an investment round with a 40% discount to its own assessment. If before the pandemic the company was valued at $ 2.55 billion, then in June its valuation fell to $ 1.25 billion. Due to the crisis, Monzo had to close the customer support office in Las Vegas and lay off 165 employees. The UK branch of neobank has also cut its staff by 295 people.
The other British bank Revolut is also going through hard times. Despite the fact that Revolut successfully attracted funding even during the crisis, due to quarantines and closed borders, transaction and fee income of the organization has significantly decreased.
To achieve break-even, which, according to its CEO, is the company’s “main goal”, Revolut had to dismiss employees. Prior to that, the company offered its employees to receive a share in the capital instead of a salary.
Apparently, the conditions for the entry of the Chase brand into the British market are not that favorable for banks. However, given the size of the investment bank’s economic base, the crisis could play for the benefits of the bank. The effects of the pandemic have weakened the players in the market, and JPMorgan, whose capitalization is estimated at almost $ 300 billion, has enough money to allow its division to operate at a loss for a long time.