While Goldman Sachs struggles, JPMorgan's digital bank is still hiring
In one month's time, JPMorgan's International Consumer Bank, known in London as ChaseUK, will be two years old. Founded in the midst of the pandemic in September 2021, ChaseUK will outlive Marcus, Goldman Sachs' seven-year-old consumer banking venture. Marcus is being dismantled, but ChaseUK is still out there hiring. And yet, some insiders say ChaseUK is not without problems of its own.
At the point of writing, ChaseUK has over 80 jobs open in the United Kingdom. Most are located in London's Canary Wharf, where the digital bank is looking for everything from software engineers and a new creative director, to UX and UI professionals. The open jobs are not unexpected: speaking at the end of 2023, Sanjiv Somani, then-chief executive of ChaseUK, said the bank planned to hire 1,000 people in the next two years.
Like Marcus at JPMorgan, ChaseUK and the International Consumer Bank that it's part of, are not profitable. In May 2022, JPMorgan explained that it expected to make cumulative losses of more than $1bn on the International Consumer Bank before it finally breaks even some time around 2027-28. The intervening years will be a time of spending: JPMorgan's recent compensation report showed a 9% year-on-year increase in costs across consumer in the second quarter.
Although JPMorgan has indicated its intention of staying the course and executing its long term strategy, investors have sometimes balked at the costs involved. The bank's share price fell 6% after the revelation in January 2022 that costs were rising, driven in part by a $12bn technology bill. More recently though, the approach seems to have been vindicated: ChaseUK customer numbers have tripled in 16 months to around 1.5m and the bank now has £15bn in deposits, still well below the new £35bn figure at which the UK government is proposing to stop banks cross-subsidizing their sales and trading arms.
Nonetheless, there are intimations of unease. Last week, Somani - who was responsible for integrating Nutmeg, resigned. JPMorgan isn't commenting on his exit, but from now on ChaseUK will be managed by Sanoke Viswanathan, a former chief administrative officer of the corporate and investment bank, who's been running the whole International Consumer business since 2018.
This might be a natural evolution of the ChaseUK strategy - JPMorgan always said it planned to launch the digital consumer bank in the UK and to roll it out internationally. Somani's displacement by Viswanathan may suggest movement into this second phase.
Equally, though, it might imply cost-cutting. Sources close to the bank claim that ChaseUK has become a cost sink, not least because the bank chose to build an entirely new product from the ground-up instead of iterating on an existing digital banking platform in the US, which might have been more efficient. The focus on offering a competitive savings rate (currently 4.1% in the UK) has also added to costs.
JPMorgan is unrepentant about its approach. In its advertisements for engineers at ChaseUK, the "green-field" and "zero legacy" nature of the bank's technology are touted as good reasons to work there. So too are its "flat structure" and 'cloud-native microservices architecture.'
Insiders claim that ChaseUK initially struggled to recruit high calibre technologists without increasing pay to match tech firms. Relatively junior people were allegedly brought on as VPs and directors despite a lack of management experience: "It's caused friction," claims one.
Now that big technology firms are cutting costs and that fintech firms are struggling for funding, external hiring may be less of a problem. Nor may it matter so much that ChaseUK is fundamentally part of JPMorgan and not actually a sparkly fintech. "There's no pool table and the Wi-Fi signal blocks almost everything," complains one insider. This may be a small price to pay for working somewhere with a big balance sheet behind it and permission to make losses for the next four to five years.
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