The Wall Street company JP Morgan
is to launch a new digital bank in the UK, in a move that threatens to shake up a banking sector still dominated by a handful of high street lenders.
JP Morgan has already hired 400 staff for its soon-to-be-launched digital bank, which will be headquartered in Canary Wharf and operate under its consumer brand, Chase.
The announcement confirms rumours about JP Morgan’s plans for a retail bank in Britain. Known only as “Project Dynamo”, Chase staff based in JP Morgan’s London offices had to keep their work under wraps for nearly two years.
It will be the second major US lender to enter the UK retail banking market, since Goldman Sachs started offering Marcus-branded digital savings accounts 2018. Marcus has already lured in 500,000 UK customers by offering higher than average interest rates. It was forced to shut its doors to new British accounts due to a surge in demand
In the US, Chase is one of the largest consumer banks in the country, serving nearly half of American households through online banking and 4,700 branches. But by offering online-only current accounts, Chase will be measured against British digital upstarts including Monzo, Starling and Revolut, which are trying to grab market share from the six largest lenders. HSBC, Barclays, Lloyds, NatWest, Santander and Nationwide Building Society still hold roughly 87% of the retail banking market.
JP Morgan said it plans to offer a “new take” on current accounts and said its new contact centre in Edinburgh will be a key selling point, offering “fast to access, personalised service around the clock.” The bank used part of its annual $11.8bn (£8.6bn) technology spending pot to build the UK Chase platform from scratch. Chase is now undergoing internal testing but is expected to launch later this year.
“The UK has a vibrant and highly competitive consumer banking marketplace, which is why we’ve designed the bank from scratch to specifically meet the needs of customers here,” said Gordon Smith, co-president of JPMorgan.
Chase has brought in seasoned City bankers to oversee its UK retail operations, including former Lloyds and Citibank chairman Win Bischoff, who will serve on the board and head up its risk committee. The former Financial Conduct Authority director, Clive Adamson, will chair the business, while the chief administrative officer of JP Morgan’s corporate and investment bank, Sanoke Viswanathan, will be chief executive.
Although JP Morgan was forced to shift hundreds of UK investment bankers to EU offices due to Brexit, it said the launch of the retail bank was proof it was committed to the UK. The bank now employs about 19,000 people in Britain and is still hiring for the new retail operation.
“Our decision to launch a digital retail bank in the UK is a milestone, introducing British consumers to our retail products for the first time,” said Daniel Pinto, JP Morgan’s London-based co-president.
“This new endeavour underscores our commitment to a country where we have deep roots, thousands of employees and offices established for over 160 years.”