First came the U.K. Now, apparently, Germany.
JPMorgan Chase is planning to launch a digital bank in Germany in late 2024 or early 2025, Bloomberg reported Wednesday, citing people familiar with the plans.
A JPMorgan spokesperson declined to comment to the wire service.
The bank has been hiring in Berlin to support the plan, and aims to make the city its base for consumer operations in the European Union, Bloomberg’s sources said. JPMorgan plans to expand its digital retail operations to other EU countries later, the people said.
JPMorgan launched its U.K. digital bank, Chase, in September 2021, after a three-year development effort codenamed Dynamo.
Chase had amassed 1 million customers and more than £10 billion ($10.8 billion) in deposits within a year, JPMorgan announced last September.
At the time, the bank said it aimed to “at least double” Chase’s 1,000 employees by 2024.
The effort has not been a moneymaker. Sanoke Viswanathan, chief executive of JPMorgan’s international growth initiatives, said in May the bank expected to lose $450 million in 2022 on its U.K. consumer bank and similar amounts “for the next few years” — but that JPMorgan’s overseas digital efforts could break even by 2027 or 2028 and “generate significant income thereafter.”
“Historically, banks have struggled to do well in markets outside their home markets in retail banking. We think this is changing with digital,” Viswanathan said.
CEO Jamie Dimon, meanwhile, quashed the idea that success overseas would turn into a brick-and-mortar presence.
“There’s no chance that JPMorgan will put 100 branches in Mumbai or Hong Kong or London or anywhere and actually compete,” he said in May.
Any effort to expand in Europe by JPMorgan would run counter to trend. Citi, for example, has embarked on a two-year (thus far) effort to sell or wind down its retail presence in more than a dozen foreign markets, including Mexico, Russia and China. Goldman Sachs, which established a digital presence in the U.K. before JPMorgan — through Marcus — is revamping its consumer-banking strategy.
And while banks such as Goldman and Barclays have set their sights on growing a German customer base in the commercial and wealth sectors, few non-German banks have broached retail. Netherlands-based ING, however, has amassed a retail customer base that’s 9 million strong, according to Bloomberg.
Regulations prohibit JPMorgan from acquiring additional U.S.-based deposit-taking institutions because the bank already holds more than 10% of U.S. deposits. Dimon, however, pledged in 2020 to be “much more aggressive with acquisitions across the board.”
JPMorgan, in 2021 and 2022, made a series of banking-adjacent acquisitions, including British digital wealth-management platform Nutmeg, a 49% stake in the Greek fintech Viva Wallets and a 40% stake in Brazilian digital bank C6.
Not all of JPMorgan’s digital banking efforts have found success. The bank shuttered its U.S. digital-only outlet Finn in 2019 after just a year, saying millennials — the platform’s target demographic — didn’t necessarily want a digital experience apart from what Chase could provide.