The Chase UK project has been shrouded in mystery. But at last, JP Morgan Chase is ready to unveil its debut, which will be branded as Chase UK. The new bank is now set for launch in September, having entered the final stages of its employee pilot and is preparing a “big bang” marketing splash. Chase’s launch is a big moment for the UK banking scene and in particular, for fintechs like Monzo and Starling, who are being taken on at their own (digital) game. Chase UK arguably offers a triple threat. It’s planning to offer more wealth-management features than the fintechs, it’ll boast a modern tech stack to outpace the incumbents and it’s supported by the colossal balance sheet of America’s largest bank. A multi-product, digital-first strategy that doesn’t rely any fintechs, is a very serious proposition and completely different from incumbents just doing offshoot brands. What’s more, Chase isn’t just going to fight banks on the retail side. They’re planning to go after the SME market too, by eventually shipping a business product. The new digital bank’s card is a dark blue, featuring the Chase logo on the right, and the user’s name is printed in silver on the bottom. There is no number printed on the card itself, which is contactless and metallic. The app itself mirrors those developed by the first neobanks. It has a slick, clean interface and several key tabs located on the bottom. That includes a transaction ledger and a ‘Pay’ tab which allows users to easily send money to Chase contacts or recent ‘payees.’ Notifications pop up after each payment and online shoppers can access their card number via the app. As promised, Chase will initially only operate as a current account, allowing users to spend and store deposits. JP Morgan has already said Chase UK has a strong product roadmap ahead, looking to add a full body of wealth management and lending services. Its acquisition of robo advisor Nutmeg speaks to this ambition. The acquisition also suggests Chase UK is going after an older, wealthier base than early neobanks, who will use Chase to store their salaries. Indeed, Nutmeg’s 140k users are broadly made up of middle-class professionals, with an appetite to borrow in large quantities. To lure this demographic, JP Morgan says it will offer users a “fast-to-access, personalised service around the clock”, delivered by a customer service hub. It’s hoping this will compensate for its branch-free approach. It’s also worth noting that, like Monzo, Chase will be a licenced bank that can store British deposits on its own balance sheet. JP Morgan’s entry into the UK marks its first international foray in the consumer space. It’s part of a strategy to aggressively grow its retail unit. With US regulators getting stricter on banking acquisitions, overseas expansion has become a necessary growth tool for banks like JP Morgan. JP Morgan’s expansion in the UK has also been tipped as a foothold for its entry into wider Europe. As a result, the US giant is clearly taking its assault on the UK seriously. JP Morgan has also invested in building an entirely separate cloud infrastructure for Chase, reportedly using 10X — the core banking tech provider. The question now is whether Chase can wrestle the market away from native giants like Barclays, as well as upstarts like Monzo and Starling. JP Morgan is also an outsider in the UK, which — coupled with user inertia — could play to local banks’ advantage. Nonetheless, Chase is not like any bank project seen, boasting an unrivalled budget, political will and modern technology.
Digital banks offer lots of benefits but fall short on customer service. Many of these online banks have almost no customer service. That includes a person you can contact to resolve any issue you have. Instead, most offer only a chatbox or email, and there’s no guarantee that anyone will respond. That means consumers are often unable to get an error or dispute fixed—or even access their own money. When consumers open up bank accounts, they naturally expect to be able to quickly get access to their own money when they need it. Without fast redress by the bank, customers could very likely be unable to pay for essential needs like food, housing, and transportation, and even face dire conditions like hunger and eviction. Online banks say customer service is important to them and they’re trying to beef up those operations, including increased access to human agents. Consumer Reports, formerly Consumers Union, is an American nonprofit consumer organization dedicated to independent product testing, investigative journalism, consumer-oriented research, public education, and consumer advocacy.
Robinhood has become synonymous with the boom in trading by smaller-pocketed and novice investors. Such investors are getting their first chance to grow their wealth, after years of falling further behind stock-owning households, but they also have been criticized for making too many risky trades with their newfound app. Shares of Robinhood Markets traded for the first time on the Nasda, following the highly anticipated initial offering by the company that’s drawn a new generation of investors into the market and forced the industry to stop charging fees for trading. Robinhood wants to be the only app that people use on their phones for money. That covers everything from depositing paychecks to paying bills to splitting payments with friends. The company is also interested in Bitcoin and other cryptocurrencies in the long-term strategy. Over time, the company wants to be the single money app, the most trusted and most culturally relevant money app worldwide: a paycheck direct deposit, emergency funds, bill pay, day-to-day spending, all types of investing ranging from more discretionary investing to long-term retirement savings as well.
Starbucks saw the ranks of its 90-day active Starbucks Rewards members in the U.S. soar 48 percent year-over-year to 24.2 million. While it is very clear that the rewards program has accelerated its recovery in a meaningful way, where Q3 really stands out, what stands out is the acceleration in non-rewards customers. While reward spend grew at a rapid mid-teens rate quarter over quarter, for the first time in 11 quarters, non-reward spend growth outpaced SR spend. The trend is more evidence of “the great human reconnection. The “rapid reengagement of non-rewards customers not only propelled record results, but also underscores the strength of the brand and the growth potential ahead.” The investments the company made in the last few years in its “coffee-forward cold beverage platform” keep strengthening sales and bring new customers to the company.
Growth is accelerating: SoFi is currently the only company with an A-to-Z offering within a single app, which sets it apart from traditional banks and other fintech competitors such as Square and PayPal. SoFi’s strong reputation in the student loan category attracts users who then pick up other financial products across the app. As of the first quarter of 2021, SoFi has a total of 2.28 million members, up 110% year over year, and it was the company’s seventh consecutive quarter of accelerating user growth. The number of products used on SoFi’s app grew 273% year over year in the first quarter, indicating that members are starting to use more products across the app after joining.
A bank charter could improve profitability: SoFi and other fintechs don’t have branches and overhead like traditional banks, so digital banks have much lower customer acquisition costs. On average, a traditional bank pays between $1,500 to $2,000 to acquire a retail banking customer. In comparison, SoFi pays just $40 on average due to its digital presence and ability to cross-sell products to users from within its app. Galileo makes SoFi diverse: Galileo is best thought of as a “toll road” that benefits from the growth of the overall fintech space, which SoFi now benefits from. Galileo is growing rapidly, with year-over-year account gains of between 130% to 135% over each of the past three quarters. It now has 70 million accounts, growing almost fourfold from just two years ago. It currently contributes roughly 20% of SoFi’s total revenue, giving investors both diversification and exposure to the broader fintech industry.
- Maslife, the payment and wellbeing platform that rewards people for keeping healthy, has collaborated with regulated e-money services provider Paynetics to power its new financial wellbeing app. The new Maslife platform enables users to make informed decisions about their lifestyle, wellbeing, and finances. It offers customers a full suite of financial tools to support them in better managing their finances and improving their state of mind. The new app helps its users to implement positive habits and mindsets with actionable steps. These include mindful spending and budgeting with accounts in GBP, EUR and USD, free currency exchanges, virtual and metal debit cards, along with other payment services. Physical and mental health is supported within the app with health activity monitoring, guided meditation, informative podcasts, and much more. There are many financial, health, and mindfulness apps on the market, but none that bring together these priority areas of life in an integrated way.
Tesco Bank, banking arm of Tesco is closing all current accounts because the majority of customers do not use them. The lender says that only 12% of its accounts are being used by customers as their primary current account. Most accounts have limited activity or are being used for other purposes, such as a savings pot. In April Tesco Bank reported annual losses of £175 million, compared to a £193 million profit in the previous year. All 213,000 Tesco Bank Personal Current Accounts will be closed from 30 November, with customers advised to switch to a new provider or move their balance to a Tesco savings account. The bank says it will now focus on serving its five million-plus customers across a range of banking and insurance products.
Starling Bank has made its first acquisition, the buy-to-let lending operation of Fleet Mortgages. Under the deal, Starling will become the sole funder of future originations for Fleet Mortgages, allowing the firm to build on its loan book by securing access to Starling’s £6.7 billion deposit base. The acquisition of Fleet Mortgages is the start of Starling move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders. the acquisition is part of a wider plan at the bank to expand lending through a mix of strategic forward-flow arrangements, organic lending and targeted M&A activity.