For years, British banking has seemed like a closed shop. A raft of start-ups including internet bank Egg and German challenger N26 have sunk without trace after trying to break the dominance of Barclays, Lloyds, NatWest and HSBC.
In fact, only Santander, Nationwide Building Society and digital newbies Monzo, Starling and Revolut can claim any real success in luring customers away from their much larger rivals. And even then, it has been a triumph of relatively small proportions: ultimately the ‘big four’ still control a colossal seven in ten personal current accounts.
This week the threat level is set to crank up several notches, however. On Tuesday, the American giant JPMorgan will launch a British digital bank, Chase, with the aim of mounting a major challenge to Britain’s market dominators.
Promise: Sanoke Viswanathan says Chase will focus on customer service
Chase, shares the same name as its US retail bank, which serves half of American households. Its £340billion parent JPMorgan is a renowned investment bank with enormously deep pockets.
The arrival of the Americans in the British current account market is a landmark moment. And Chase’s Indian-born boss Sanoke Viswanathan is under no illusions about his parent company’s ultimate goal.
‘We have taken this decision very, very seriously and spent years thinking about it,’ he tells The Mail on Sunday. ‘When we committed to it we knew it was going to be a long time before we actually break even and start generating real profits for the company. [To do that] you have to be one of the top banks. So that’s our aim, and we’re patient, we’ll get there. We are launching a bank that is going to be around for a long time in the UK. We’re not taking this lightly.’
Chase will start as a slick banking app with top-notch customer service and no branches. Part of the reason is that Viswanathan believes his main competitors – outside the established banks – will be tech giants such as Alibaba and Tencent in China, and Amazon, Google and Apple in the US.
JPMorgan’s global chief Jamie Dimon himself warned earlier this year that big tech is already an ‘enormous competitive threat’ to banks. ‘There’s been a real shift in the competitive landscape,’ Viswanathan says, echoing his boss.
‘There are big tech and e-commerce giants who are very much in this space now and will be increasingly viewing themselves as providers of financial services.
‘The Chinese giants, whether they will be successful in the UK or not, they are definitely trying, as are the other tech companies. It’s hard to tell exactly how things will shake out – we are in the early innings and there’s a long way to go before we see the winners.’
Although the big four UK banks have upped their game in recent years, launching mobile apps and better online services, Viswanathan believes their offerings are nowhere near up to scratch. For example, one of Chase’s points of difference will be offering customer service all day and all night, seven days a week.
Viswanathan says in just two taps on the app, Chase customers will be connected to support staff based in Edinburgh and around the world, who will work around the clock.
‘We think that’s still a gap in the industry,’ Viswanathan says. ‘Not many [banks] have done this because it’s expensive.’
He argues Chase is perfectly placed to take on the big banks and tech giants because it can offer modern digital banking backed by a trusted old institution that has safeguarded customer money for more than two centuries.
Chase will launch this week with ‘competitive’ rates and offers to lure the first wave of customers, Viswanathan says. Then, over time, he wants Chase to become a ‘super app’ that can manage your pension, insurance, investments, mortgage and help you save on energy bills and other utilities. Customers can also expect rewards and perks such as travel and entertainment discounts.
Viswanathan reckons the time is right to swoop in before the tech giants move from payment services such as Apple Pay and Google Pay to offering fully-fledged current accounts. If Chase is successful in the UK, the idea is to take the concept global. Viswanathan says: ‘Why start in the UK? All the research we’ve done shows that customers are clamouring for great service that they can access easily. And that’s what we’ve built.’
Viswanathan, 46, was brought up on a farm in rural Southern India and studied engineering at university. But he is no stranger to banking in Britain or the US. Before Chase – which he started working on in 2018, when the project was codenamed ‘Dynamo’ – he held a senior position in JPMorgan’s investment bank in London specialising in technology. And prior to joining the US bank in 2010, he worked at consulting powerhouse McKinsey advising the US government during the financial crisis.
Viswanathan knows growing Chase won’t be straightforward. Egg, an online bank launched by Prudential in 1998, also committed to top-notch customer service, for example. It didn’t take off and ended up being sold off piecemeal.
Chase will hope its aim of becoming a ‘super app’ will set it apart. The bank has already acquired Nutmeg, an online wealth management business and has the firepower to keep acquiring bolt-on businesses to expand its services quickly. ‘Acquisitions are going to be a part of the mix,’ Viswanathan confirms.
As will rewards. In the US, Chase – which has both branches and an online presence – has acquired CX Loyalty to offer travel benefits and rewards to credit card customers who spend.
‘We are known for our awards in the US,’ Viswanathan says as if to ram home the point. ‘And we will be globally.’