US bank JP Morgan Chase has recruited 400 staff in the UK to work for its UK digital bank, which will launch in the coming months.
The digital UK bank, which will be based in Canary Wharf in London, will offer consumer banking products including current accounts.
JP Morgan Chase, headquartered in New York, is one of the US’s biggest banks
Gordon Smith, chief executive of consumer and community banking at the firm, said: “We are bringing Chase to the UK because we want to provide customers with a new banking choice – one that will enable them to benefit from a simple and exceptional banking experience, built on the significant capabilities of JP Morgan Chase.”
He said the new bank has been designed “from scratch” to meet the specific needs of UK consumers.
The Covid-19 pandemic has accelerated the take-up of digital banking services by consumers and businesses, with lockdowns restricting the movement of people. Unable to visit bank branches and shop in person has driven new users to digital banking.
This has spurred a new wave of investment and development in fintech. The entry of JP Morgan Chase into the UK digital consumer banking space is a reflection of this.
The huge technology resources and capital held by banks such as JP Morgan Chase could fuel the next iteration of fintech.
Fintech entrepreneur Matthias Kroener, who set up and later sold Fidor, one of the earliest digital challenger banks, told Computer Weekly the pandemic has been extremely stressful for fintechs, but that many are driven by the thought there will be a huge opportunity when the crisis is over. “It is an evolutionary moment accelerating the fintech industry, which could see companies move into new business lines,” he said. “Covid-19 could accelerate the arrival of the next iteration of the fintech industry.” But Kroener said while retail deposits will be good for JP Morgan Chase’s business he doubted there will be any real innovation.
Recent news that Starling Bank, one of the first digital challenger banks in the UK, reached its first profit will also spur confidence in the sector.
Receiving its UK banking license in 2016, the app-based challenger bank was one of the early cohort of new banks harnessing the latest technologies to take on the traditional high street giants. In November 2020, it reported its first profit.
Ron van Wezel, senior analyst at Aite, is following Goldman, which also started a neobank in the UK, known as Marcus. “The challenger bank market is pretty crowded, and I am curious how JP Morgan Chase will position the new bank to compete against both incumbents and challengers. Certainly not a walk in the park for the bank.”