JPMorgan Chase's investment in digital is allowing it to maintain a healthy user engagement
This story was delivered to Business Insider Intelligence Banking subscribers earlier this morning. To get this story plus others to your inbox each day, hours before they're published on Business Insider, click here. As of Q3 2019, JPMorgan Chase has 51.8 million active digital customers — up 7% year-over-year (YoY) — 36.5 million of whom use mobile banking, marking a 12% spike YoY. That's basically flat with last quarter, when digital customer growth was 6% YoY and mobile banking growth was also 12% YoY. Chase's investments in digital are allowing it to maintain healthy engagement among users and build up an advantage with younger consumers:
- Chase is the biggest spender for tech investments of any major bank in the US. Chase has an annual tech budget of $11.4 billion, followed by Bank of America's $10 billion tech budget and Wells Fargo's $9 billion. And the firm is pouring more funds into its services overall: Its total expenses in Q3 2019 rose 5% to $16.4 billion, which the firm attributed to "higher volume- and revenue-related expenses and investments." Some of that money likely went to technology, although the firm isn't neglecting in-person banking: It plans to spend $20 billion to open 400 new branches.
- The Chase mobile app has become a more significant channel for new account opening and attracting younger consumers. Although the firm recently shuttered its digital-only bank, Finn, after only a year, it's still "gaining share in millennials every day," Dimon previously said in an interview. And despite the customer segment's infrequent branch visits, Chase's increased share of millennial customers is likely due to its work in building out its digital capabilities. The firm has improved on digital account opening, for example, cutting down the time it takes from 3-5 minutes on average, and it now comprises 25% of Chase's new account activity.
Engagement in Chase's consumer banking operations — powered in large part by growth in digital — allowed the firm to soften the impact of lower interest rates. The Federal Reserve lowered interest rates twice during Q3 2019 — the first time in over 10 years — to prevent an economic slowdown, which squeezed bank margins.
Previously, rising interest rates increased the profitability in Chase's lending operations for the past seven years. But JPMorgan Chase CEO Jamie Dimon notedthat the firm "delivered record revenue this quarter, demonstrating broad-based strength and the resilience of [its] business model despite a more challenging interest rate backdrop," specifically highlighting "healthy volumes" in its mortgage, auto loan, and credit card segments.See the rest of the story at Business Insider
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