Financial giant JPMorgan is doubling down on transforming its systems and expanding its digital capabilities so that it can leverage new and emerging technologies to drive better offerings, services, experiences, and value for its customers.
The bank is not only looking to maintain its competitive edge over such competitors as Citigroup, Bank of America and Wells Fargo but also wants to prevent FinTech startups and non-financial firms such as Amazon from stealing its market shares and revenue streams.
Amazon is a particular concern. Earlier this year, Bain & Company estimated that the e-commerce giant’s financial services division could grow to more than 70 million US consumer relationships over the next five years or so, the same as Wells Fargo, the third largest bank Stateside.
It based this on slightly more than half of Amazon’s estimated US customer base choosing a financial relationship with the firm; the same share of people who said in its global survey that they expect to buy a financial product from a major technology firm over the next five years.
It should, however, be stressed that the pace of customer sign-up will hinge on competitive pricing and a distinctive experience so that positive reviews spread quickly.
If anyone can go toe to toe with Amazon it’s JPMorgan, which has one of the highest technology budgets among the top global banks. It has allocated US$10.8 billion for tech spending in 2018 with more than US$5 billion being earmarked for new FinTech investments.
Earlier this year, for instance, it was part of AccessFintech’s Series A funding round. AccessFintech, a British risk management platform designed for banks, brokers and buy-side firms, also joined JPMorgan’s In-Residence programme.
In addition to investing in and acquiring cool startups and forming strategic partnerships and collaborations, it is gaining access to emerging technologies by setting up accelerators and incubators.
Ultimately, JPMorgan is migrating away from legacy systems toward incorporation and assimilation of emerging technologies into the bank’s business processes and systems. And it has, in the process, become a major player in the blockchain space.
JPMorgan CEO Jamie Dimon, is no fan of Bitcoin. He famously once called it a fraud and said he would fire any trader known to be trading the cryptocurrency. He returned to the subject in a recent interview with the Harvard Business Review, arguing that cryptocurrencies are not the same as gold or fiat currencies.
Those are supported by law, police, courts. They’re not replicable and there are strictures on them. Blockchain, on the other hand, is real. JPMorgan is testing it and will use it for a range of things, he said.
Examples of this include the Interbank Information Network (IIN), which JPMorgan, Royal Bank of Canada and ANZ have been trialing for the past year and which recently expanded, with more than 75 banks now involved.
Truth be told, there is much that incumbents can learn from JPMorgan’s digital transformation journey.