JPMorgan doubles down on UK retail bank Chase LONDON Reuters -- Wall Street giant JPMorgan is planning to double the size of its workforce at the fledgling British retail bank Chase in a matter of two years, the CEO of the venture told Reuters, despite losses and investor scepticism.
Since its launch in September, JPMorgan has attracted one million customers and more than 10 billion pounds of deposits to its UK mobile app bank.
The bank wants to replicate this template in other international markets despite an intensifying cost of living crisis that has soured the outlook for retail banks globally.
Britain has been hampered by a crisis of investor confidence after Finance Minister Kwasi Kwarteng sent the pound and government bonds into freefall on Friday with a plan that unnerved markets.
In an interview on Friday, Sanjiv Somani, UK chief executive of Chase, said that the bank's UK headquarters in Canary Wharf in London wanted to be international starting with the UK.
You have to look at a ten-year view. If you look at anything shorter, it will not lead to the right conclusion. The retail banking revenue pool is in the trillions, even outside the U.S. He didn't say where Chase might launch next. Retail bankers are being hired in Germany ahead of a potential launch there, according to a report by Reuters.
Chase already has 1,000 staff in Britain - out of a total of 19,000 JPMorgan employees in the country - and Somani says that number will double by the end of 2024.
By the end of 2023, Somani said that the venture will expand from current and savings accounts by rolling out lending products - likely starting with a credit card.
JPMorgan will also look to integrate its investments business Nutmeg - which it bought for around 700 million pounds last year - into Chase over that timeframe, he said.
Somani started his career in retail banking in India, helping Citi launch a simpler version of a 'digital bank' that would text you your bank balance.
In the medium term, we want to be a full service bank, he said, of Chase, it had no immediate plans to roll out branches.
One of the world's largest banks can easily absorb one of the rapid growth of the venture, despite the fact that it has come at a hefty price tag.
JPMorgan said at its investor day in May that it expected to lose $450 million in 2022 and outlined cumulative losses north of $1 billion over several years, before projections that it would break even in 2027 -- 28.
Somani said that the May investor day projections still held, but that revenues generated from lending and expansion of Nutmeg's fee-based services would ultimately put it in the black.
Investors have expressed concern about the lack of detail on JPMorgan's digital investments and their uncertain prospects, adding to pressure on the international consumer arm to succeed.
History is against JPMorgan's attempt to build a digital online bank in the UK and elsewhere, said Mike Mayo, a banking analyst at Wells Fargo, though he said JPMorgan's U.S. digital expertise and deep pockets could make the difference.
The UK market has seen many aborted attempts to challenge the dominance of its main high street banks - including Barclays, Lloyds and NatWest. After just two years, Germany's N 26 left the country, while Citi axed its UK retail bank last week.
Chase is facing stiff competition from both local digital brands like Monzo and those offered by large institutions such as Goldman Sachs' savings bank Marcus. Marcus grew at a similar pace to Chase earlier in the day, amassing 13 billion pounds of deposits in Britain in its first 17 months.
He said that we're the best-funded fintech in the world.