In JPMorgan Chase & Co's JPM annual shareholder letter, chairman and CEO Jamie Dimon discussed fintech’s competitive threats on traditional finance.
What Happened: Fintech is one of the “enormous competitive threats” to banks, according to Dimon. He says big tech companies and fintech are encroaching on the dominance of traditional banking institutions.
This comes as the COVID-19 coronavirus pandemic accelerated the digital disruption in finance. According to one survey, Americans are generally more accepting of fintech with younger Gen Z and Millennials owning the most fintech accounts.
Dimon said fintechs made great strides in building digital and physical banking solutions: “From loans to payment systems to investing, they have done a great job in developing easy-to-use, intuitive, fast and smart products."
Dimon noted traditional banks still have significant strengths in branding, scale, and operations.
Still, “Fintech's ability to merge social media, use data smartly, and integrate with other platforms rapidly (often without the disadvantages of being an actual bank) will help these companies win significant market share,” he added.
Why It Matters: JPMorgan is part of a larger group of institutions acknowledging the digital disruption in finance. The company even founded its own digital banking and innovation arm in an effort to position itself as a holistic destination for digital spending, saving, investing, and borrowing.
“Last year accelerated digitization of all industries, including banking," Allison Beer, the chief product officer and head of customer experience and digital for JPMorgan told Benzinga last month. “We’re seeing customers habituated into digital banking, in a way that would have likely happened, but may have taken longer. These trends … will continue to accelerate.”
In light of trends, JPMorgan is looking to provide a broader spectrum of solutions to allow households to have better control over their finances.
“There are a few things we’re focused on. One, making our digital channels work harder for our customers, giving them advice in the context of their financial picture,” Beer noted in reference to Chase’s ability to predict recurring payments and nudging customers to save and invest enough through advisory and digital channels.
“The other thing is making everything real-time and automated. Making sure every single pain point is easier and more straightforward.”
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