Jamie Dimon’s British startup is a global story

Chase UK has many finance folk scratching their heads. Britain doesn’t need another online-only bank. It already has a host of scrappy upstarts making little headway against a handful of dominant traditional lenders.
So why is JPMorgan Chase & Co spending time and money pursuing UK customers? If it wins a couple of percentage points of market share, the profit would surely be no more than a rounding error for the largest US bank.
Chief Executive Officer Jamie Dimon has been catching some rare flak from analysts and investors for giving limited detail on a step-up in technology costs. The bank’s shares dropped sharply after its full-year results in January when it said expenses in 2022 would be higher and returns lower than expected due partly to $3.5 billion of extra investment.
With two decades of success behind him, Dimon has earned the right to expect trust and patience from shareholders, analysts say, although some worry that he might be empire-building in his later years. Chase UK, launched last September, is one small element. JPMorgan has also spent on things like a 40% stake in Brazil’s digital C6 Bank and the takeover of restaurant review site, The Infatuation.
Recognising the unease, the bank has promised more detail at an investor day next month following its first-quarter results.
Dimon sees competition everywhere — from Citadel Securities in financial markets to payments company Stripe, and even Apple Inc. He wants to spend what it takes to win. Many of these competitors are going after JPMorgan in its own backyard, so fighting for a sliver of British banking against the likes of Monzo or Starling Bank looks like a distraction from defending its core businesses. But Chase UK mostly isn’t about the UK Its significance will be as a laboratory — a testing ground for infrastructure, technology, products and ideas. What JPMorgan learns there can be used to modernise its core Chase US retail bank and be the foundation of a string of digital-only offerings elsewhere. Chase UK is ground zero of an international consumer business.
To make good money in the UK alone, a traditional bank needs a market share of 20% or more, like Barclays Plc or Lloyds Banking Group. But the scale a digital-only Chase bank needs to turn meaningful profits across multiple countries is maybe only a few percentage points share in each.
The UK is a good place to build and test new ways of doing things: It’s a dynamic market where people are comfortable handling their finances on their phones and the regulator has a good understanding of the benefits and risks of using cloud computing.

—Bloomberg