The banking firm has been talking with London regulators about the idea, according to The Financial Times on Saturday (Feb. 22).
The operation will likely include savings and lending products, and it comes just two years after U.S. bank Goldman Sachs launched a digital bank called Marcus in the U.K. Goldman’s strategy is to lure U.K. customers with high-interest rates for savings accounts, and then lowering its group funding costs that way. Marcus racked up £13bn ($16.9 billion) in the U.K. using that method.
The entrance of JPMorgan Chase is a boon for London, which is preparing to see an exodus of financial institutions moving out due to Brexit — the U.K. leaving the European Union. Chase has usually not done international operations, preferring to nurture its huge and profitable domestic market. But the bank had no comments on the matter as of Sunday.
JPMorgan Chase tapped an ex-regulator, Clive Adamson, to head up the efforts to launch the digital bank. Adamson was a former head of supervision at the Financial Conduct Authority. Since leaving that role in 2015, he has worked in other capacities for JPMorgan, chairing its international business between 2016 and 2019. Currently, he works as a non-executive director at the JPMorgan Securities PLC, one of the bank’s primary European legal arms.
Adamson also has experience as a retail lender, chairing the risk committee at Virgin Money until last November. He stepped down from that position to take an unnamed “external appointment.”
Goodbody analyst John Cronin told the F.T. the U.K. has a lot of players in the banking realm. However, the competitive landscape is still concentrated and the market could be upended by a player with more financial pull and lending power.
JPMorgan also recently introduced a new initiative in Japan, targeting smaller companies as customers.