Dive Brief:

• JPMorgan Chase’s U.K. retail bank — named simply Chase, as it is in the U.S. — is set to debut Tuesday when the smartphone app launches, Sanoke Viswanathan, the company's CEO of international consumer growth initiatives, told The Times of London and the Financial Times in interviews published Friday.
• The digital bank will first offer current accounts with a rewards program but is set to expand into savings, personal lending and investment, and mortgages, the publications reported. If the U.K. effort proves successful, further plans would include retail expansion into continental Europe and Latin America.
• Chase wants to enable customers to "do all their banking with us and not have to bank with other people" within three to four years, Viswanathan told the Financial Times. Despite that ballpark timeline, Viswanathan emphasized the company would be patient in its approach to growth. "We’re not in a rush to drum up numbers," he told The Times of London. "The quality of the business we build is more important."

Dive Insight:

Tuesday’s digital bank launch will mark the culmination of a three-year effort that, during its development, was codenamed Dynamo. It wouldn’t be JPMorgan’s first attempt to create a separate digital bank. The bank shuttered its U.S. digital-only outlet Finn in 2019 after just a year, saying millennials — the platform’s target demographic — didn't necessarily want a digital experience apart from what Chase could provide.

JPMorgan enters a retail environment populated with incumbents such as HSBC, Lloyds, Barclays and NatWest, as well as native challengers Monzo, Revolut and Starling.

Viswanathan said JPMorgan aims to disrupt the market to eventually join "the top few" banks in the U.K. "We know we have our work cut out to get customers to understand what Chase is all about," he told The Times of London. "Arguably we have last-mover advantage."

Other advantages, though, might be access to JPMorgan’s swollen tech budget without the cost drag of a brick-and-mortar branch network. The bank's regulatory expertise, too — and, again, the JPMorgan balance sheet — may give Chase a leg up on other challengers.

JPMorgan hasn’t disclosed how much it has invested in its U.K. digital bank — a somewhat secretive project the company didn't publicly acknowledge until January. But Viswanathan told The Times of London "this is one of top two or three things the bank is doing."

"London will be the global headquarters of something which could be far-reaching — the focal point of what the whole international digital bank will be in the future," he said.  

The bank wouldn’t be the first Wall Street behemoth to launch digital banking in the U.K. Goldman Sachs brought its Marcus platform across the pond in 2018. However, while Marcus has taken in billions in customers’ savings, Goldman has poured those deposits back into its investment-banking operations instead of broadening its digital offerings.

That formula may yet work for Goldman. The savings option was popular enough that the bank stopped taking new applications for savings accounts in June 2020 to keep its deposits under a £25 billion threshold that would necessitate stricter regulation. It resumed accepting new applications in February.

For JPMorgan Chase, however, international growth is the only way it can expand in retail. Regulations prohibit the bank from acquiring additional U.S.-based deposit-taking institutions because it already holds more than 10% of U.S. deposits.

JPMorgan CEO Jamie Dimon had considered expanding retail operations overseas about a decade ago, according to Bloomberg. But buying a rival with a branch-heavy footprint would cause the bank to lose money "for the rest of our lives," Dimon said.

Viswanathan stressed the bank is "committed to [the U.K.] for the long term."

"We didn’t take this decision on a whim," he told the Financial Times. "We will spend hundreds of millions before we get to break-even and get to a place where this is a sustainable business, and we’re not in a rush."

The launch of JPMorgan’s digital platform comes after the bank ran a six-month pilot program among 6,000 of its employees. The bank counts 19,000 U.K.-based workers, but most are in investment banking. The Chase effort employs 400 people in London, 200 in Edinburgh and 250 call-center workers in India and the Philippines.

Even domestic banks have had their stumbles launching digital platforms in the U.K. NatWest closed its digital bank Bó in May 2020, six months after it launched.

Challengers, too, have had to pull back from the U.K. German neobank N26 cited Brexit in its decision last year to abandon the market and close all of its U.K.-based accounts.

For its part, JPMorgan Chase may have to do some reputation repair in Britain after the bank agreed to underwrite an investment of up to $4.8 billion this year in the failed European Super League. The soccer venture fell apart — before any matches were played — when nine of its 12 founding clubs dropped out amid backlash from fans, leagues and political figures. The bank apologized, saying, "We clearly misjudged how this deal would be viewed by the wider football community and how it might impact them in the future. We will learn from this."

Chase’s launch won’t be JPMorgan’s first move in the U.K. this year. It agreed in June to buy British digital wealth management platform Nutmeg for a reported £700 million ($972.8 million). Elsewhere internationally, the bank announced plans to take a 40% ownership stake in the Brazilian digital bank C6. More recently, JPMorgan agreed to acquire nearly 75% of German car-maker Volkswagen’s payments platform.

The bank has been somewhat of a serial acquirer this year, making more than 30 deals, according to the Financial Times, which cited data from Refinitiv. In the U.S., the bank announced it would buy San Francisco-based OpenInvest, a platform that helps financial professionals customize and report on values-based investments. Last week, JPMorgan Chase agreed to purchase restaurant platform The Infatuation, which owns the Zagat guidebook and review brand.