JPMorgan Chase finalizes UK digital-only launch plans, but it could struggle to stand out

  • JPMorgan Chase confirmed a digital-only bank launch in the UK, where it will face stiff competition.
  • But the US incumbent it could use the addition of in-demand, timely features to stand out.
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Chase will launch a digital-only bank in the UK by the end of the year, per The Wall Street Journal, finally confirming speculation that had been brewing since at least last summer. Sanoke Viswanathan, former chief administrative officer and head of strategy at JPMorgan's corporate and investment bank, will serve as CEO of the digital bank, which has already hired 400 UK employees.

This endeavor follows the downfall of Finn, Chase's prior attempt at a digital-only bank in the US. Finn was a millennial-geared banking app that Chase discontinued in June 2019, just a year after its national rollout. The service failed primarily because it did not differentiate itself from Chase's flagship mobile banking app, which likely gave consumers little incentive to choose Finn. Because Chase doesn't have a presence in the UK yet, it won't run into that specific issue with its new venture—but it also won't have strong brand recognition to rely on.

Although the UK launch won't be without its challenges, key differences between the US and UK market could make Chase's new digital bank more successful than Finn.

  • The venture will face a cutthroat digital banking environment. The UK neobank landscape is crowded with mature homegrown competitors—some with millions of users—that offer cutting-edge digital features. Chase even reportedly considered buying one of them (Starling) to kickstart user acquisition. And digital-only plays from incumbents have gained footholds too, including Chase peer Goldman Sachs, whose Marcus offshoot counts 500,000 UK users. But others have fallen victim to crowding: Last year, RBS shuttered its standalone digital-only bank Bó after operating for only about six months, because it struggled to find a way to stand out.
  • But there is likely still room for Chase, as UK consumers have proven highly receptive to digital-only offerings. Having multiple bank accounts from different providers is common in the UK, which means one less barrier for customer acquisition. There will be an estimated 12.1 million digital-only bank account holders in the UK at the end of 2020, and they're poised to number 19.5 million by 2024—or 36.1% of the population.

Chase's best bet at a successful launch is the addition of value-added and timely features that distinguish it from its established competitors. Tools like intuitive spending graphs, spending breakdowns, and categorized budgets are expected from neobanks and central to many of their offerings.

Chase should go beyond those basic capabilities, through the addition of rare features like subscription management capabilities, which is considered "extremely valuable" by 38% of respondents to Insider Intelligence's UK Neobank Competitive Edge survey, but not offered by any of the four leading UK neobanks as of mid-2020.

And to drive even more value, in rolling out such tools, Chase should emphasize how they can empower UK consumers to get their finances back on track amid pandemic-driven economic upheaval.

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