JP Morgan & Chase Co – The Digital Transformation Case Story

JPMorgan is rebuilding its consumer business model to create a “digital everything” strategy that trades short-term losses for long-term profits.

With $2.6 trillion in total assets, JPMorgan Chase is the largest bank in the US. Its retail bank, Chase, spans 61 million American households.

Led by Chairman and CEO Jamie Dimon, the bank is undergoing a transformation, moving away from offline legacy systems and into the digital age. Over the past two years, the bank has spent nearly $20B to scale its technology & prepare itself for the next generation of banking.

60% of US bank customers say they are willing to try a financial product from a tech firm they already use, and that number rises to 73% for customers aged 18-34.

This trend towards digitization is already starting to play out as hashtag#fintechs circumvent banking licenses by partnering with issuing banks to offer checking account-like products.

Key takeaways
• Tech hiring is a top priority.
• JPM leads banks in active digital customers.
• JPM boasts an industry leading credit card network.
• JPM began betting on payments a decade ago and it hasn’t slowed down since.
• JPM is the first consumer bank to give free trades to all retail customers.

Since 2012, JPMorgan Chase & Co. has applied for 120 patents related to “payment systems” (of those, it has so far been granted 63). It has also been granted 19 patents related to “debit cards,” 13 for “mobile payments,” 14 for “credit cards,” and 9 for “contactless smart cards.”

hashtag#Payments is the ultimate long-game. JPM continues to make long-term bets in the space, scaling its network through many channels, from strategic investments to in-house building projects.
JPM’s innovation in payments has led to the creation of its closed-loop payment network, ChaseNet.

Through a 10-year partnership with Visa, ChaseNet has been able to process payments on Chase-to-Chase transactions. It processes transactions in fewer steps than traditional networks, eliminating the need for money to move from an acquiring to an issuing bank by servicing only Chase2Chase payments on its closed-loop network.

“There’s no network fees, no merchant-acquiring fees, we will not charge them back for fraud once we’ve approved a transaction, and we will also give them the opportunity to drive down further their cost of acceptance based on how much volume they do with Chase.”- Gordon Smith.

In other words, ChaseNet benefits all parties involved: JPM, merchants, and consumers.