Abstract：JPMorgan Chase & Co. plans to open a digital bank in Germany as its second overseas consumer outpost, creating a platform for the largest US bank to further develop in Europe.
According to those familiar with the plans, the launch is scheduled for late next year or early 2025, and the company intends to target additional EU nations after that. JPMorgan has started recruiting in Berlin as part of the endeavor, and the bank expects to base its EU consumer operations in Berlin, according to the sources, who asked not to be named since the plans aren't public.
JPMorgan, located in New York, launched its first consumer venture outside of the United States in late 2021, with a digital-only retail bank in the United Kingdom providing checking accounts. According to the sources, the company intends to launch credit cards on that platform as soon as this year, followed by personal loans. A JPMorgan representative refused to comment on the bank's ambitions for overseas consumer growth.
The banking market in Germany is one of the most competitive in the world. The great majority of the country's hundreds of lenders are tiny, and because of their unusual ownership structure — many savings banks are owned by municipalities —, they face less pressure to earn profits.
Foreign banks such as Barclays Plc and Goldman Sachs Group Inc. have increased their presence in the country as they seek a larger share of the business with German corporations and rich people. Many non-German banks have avoided retail, where profits are poor, with ING Groep NV being a notable exception. In Germany, the Dutch bank presently has almost 9 million clients.
Rivals Pull Back
JPMorgan has long avoided the pricey, branch-heavy model that competitors Citigroup Inc. and HSBC Holdings Plc used when expanding internationally. The development of fintech applications in recent years altered the arithmetic for JPMorgan's overseas consumer initiatives, and that caution proved prudent.
JPMorgan is now one of the few large US banks that is developing its customer footprint worldwide. Citigroup is in the midst of divesting more than a dozen retail divisions globally. Goldman Sachs Group Inc. has also said that it is withdrawing from consumer banking, including a UK offer.
In a May investor presentation, Sanoke Viswanathan, JPMorgan's chief strategy and growth officer who heads the firm's worldwide consumer drive, revealed the firm's intentions. According to Viswanathan's presentation, Chase UK has over 500,000 clients and over $10 billion in bank balances as of that month. While the company expected a $450 million pretax loss from the initiative last year, it intends to break even in five to six years.
“Outside of the United States, consumer banking offers a big untapped potential for the corporation,” Viswanathan said at the time. “Historically, banks have struggled to operate successfully in retail banking areas outside of their home countries, but we believe this is changing with digital.”
JPMorgan's veteran CEO, Jamie Dimon, has been pouring money into acquisitions and investments in recent years to expand products and stave off competition. Last year, in a section on that issue in his annual letter to shareholders, he emphasized the company's consumer development overseas, praising benefits such as a worldwide payments business and an international private bank.
JPMorgan agreed to purchase UK digital wealth provider Nutmeg in 2021 as part of that investment strategy, which it is now integrating into its UK platform. In the same month, it acquired a 40% interest in Brazilian bank C6.
“We have a large product roadmap ahead of us, including loan and investment products, and as we build this out, we wanted to complement and expedite our plan,” Viswanathan said in May, praising both investments.
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