The news: JPMorgan’s UK digital bank Chase has attracted half a million customers and $10 billion in customer deposits since its September launch.
A closer look: When Chase rolled out last year, it became JPMorgan’s first retail banking presence outside of the US. The banking heavyweight’s investor day slides reported that:
- Chase has enabled 20 million card and payment transactions.
- The estimated total non-interest expense per customer for digital challenger banks was two to three times less than for traditional banks.
- But JPMorgan expected Chase to lose $450 million in 2022 and for this loss to continue at a similar level “for the next few years,” according to CEO Sanoke Viswanathan.
- The challenger bank was projected to break even in five to six years, with “planned expansion to multiple products to offer full-service banking.”
Breaking it down: Chase’s projected losses are a drop in the ocean when compared to its parent’s huge earnings. And its performance is on par, considering it only launched in September and operates in an industry where less than 5% of neobanks break even.
However, the losses are significant, given the pressure the bank is under for its 30% hike in spending on new projects, which is mainly tech expenditure. The bank’s projections for Chase are likely an attempt to appease investors who called for more clarity regarding the rationale behind launching the digital bank.