JPMorgan takes on UK rivals with launch of digital bank Chase

By Lawrence White

LONDON (Reuters) – JPMorgan is challenging its British rivals in their own territory with the launch on Tuesday of its long-awaited digital retail bank, Chase, as part of what the US lender hopes will be global expansion.

Launch marks first foray into retail banking outside of North America by one of America’s most dominant lenders, putting pressure on UK incumbents such as Lloyds, Barclays, NatWest and HSBC , who are already battling low interest rates and upstart digital competitors.

“We have seen which markets customers are really willing to do their banking primarily through digital channels, and the UK is frankly leading the way in that regard,” said Sanoke Viswanathan, managing director of the new banking company Chase .

The business, if successful, could see the U.S. bank expand to continental Europe and then to the world, he said.

“It’s a business we’re building not just for the UK but hopefully for the rest of the world, and there’s a great confluence of talent here across the different product functions, so that’s a great place to build a global headquarters for this new business, ”he said.

JPMorgan will encourage customers to sign up for toll-free accounts with introductory offers including 1% cash back on debit card spending and 5% interest on loose change rounded up from their purchases and set aside in a separate savings jar.

“With a strong technology platform, significant financial resources and a global brand, JPMorgan could be a serious player in the UK retail banking space,” said Nic Ziegelasch, analyst at brokerage Killik & Co.

The Wall Street giant enters a competitive UK market with extremely thin margins caused by low central bank interest rates and a tradition of free checking accounts, unlike most global markets where customers even pay for basic services.

“The structure of the UK market is such that you have to generate economies of scale, there are profits to be made, but if you are on a lower scale or have high cost infrastructure you don’t not going to make it work, ”Viswanathan said.

JPMorgan is following its US rival Goldman Sachs, which collected billions of pounds in deposits when it launched its digital bank Marcus in Britain in 2018 with an interest rate of 1.5% on savings, then higher at the market.

It will also be competing with digital-only banks such as Monzo, which has attracted around 5 million customers with its coral pink cards and user-friendly app, but has struggled to make stable profits from it.

The bank has already hired some 500 employees in Britain, Viswanathan said, and will add more as it strengthens its customer support teams.

(Reporting by Lawrence White; Editing by Bernadette Baum)

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