10-Q, Member Exclusive

Is Chase UK fighting off challengers, or is it the other way around?

  • with the UK's landscape for mobile and digital banking services coming into focus, major international institutions like JPMorgan Chase are capitalizing on the opportunity and entering the UK market.
  • The task now facing UK neobanks is to sustain their momentum in an evolving market where competition grows stronger and customer demands become sharper.
close

Email a Friend

Is Chase UK fighting off challengers, or is it the other way around?

    Taking a page from the challenger bank handbook, JPM is diving into the UK market with a modern twist


    In the US, large incumbents like JPMorgan, Morgan Stanley, and Citi have long maintained a stronghold, making it difficult for new entrants to break through and compete with these well-established, resource-rich institutions. The status quo has not changed much to date.

    By comparison, the UK’s banking landscape is gradually opening up with more room for new players to challenge their incumbents. In fact, the last couple of years have seen UK challenger banks pulling out all the stops to make a powerful push in the banking industry.

    The US has a more fragmented regulatory environment, involving both federal and state-level oversight. This complexity, combined with a larger number of dominant traditional banks, has made it more challenging for neobanks to establish the same presence they have in the UK. Moreover, British consumers have been more receptive to digital and mobile banking solutions with improved UI/UX, embracing these services early on. 

    The pulse of UK challenger banks

    UK challengers like Revolut, Monzo, and Starling are among the leading names making notable progress. Although their valuations may have dwindled, they continue to achieve strong revenue growth. Starling continues to hold its ground as one of the UK’s leading neobanks in terms of profitability. Revolut achieved a record profit of $545 million in 2023, while Monzo reported its first annual profit for the year ending February 2023.

    While deposit volumes of these digital banks may not match those of traditional banks, they have benefited from three significant factors contributing to their revenue growth in recent times:

    • Growing customer base
    • Rise in interest rates
    • Expansion to new markets

    The case of Revolut: Take Revolut, for example; although individual deposits may average only a smaller amount from millions of customers, the size of its growing user base means these amounts collectively make an impact. Expanding into new markets and regions has enabled the neobank to reach 45 million global customers, over 9 million of whom are based in the UK. This growth directly leads to an increase in payment volumes and foreign exchange transactions, resulting in higher revenue from fees and commissions. This coupled with interest income on deposits and loans has been a crucial catalyst for accelerating Revolut’s revenue growth.

    In 2023, Revolut reported a total revenue of $2.2 billion, a significant jump of 95% from 2022, when the neobank recorded its lowest revenue growth. 

    This July, Revolut achieved a major triumph by securing a UK banking license, albeit with some restrictions, after a three-year wait for the approval. Although this development could be concerning for established UK banks such as Barclays, Lloyds, HSBC, and NatWest, it creates a clearer pathway for Revolut to directly compete with these major institutions. This advancement also brings the prospect of an IPO closer to reality for the neobank, which is already on its radar.

    Nearly outdoing legacy banks in app downloads?


    subscription wall for TS Pro

    0 comments on “Is Chase UK fighting off challengers, or is it the other way around?”

    10-Q, Member Exclusive

    The little-noticed side of TikTok finance: From off-the-wall money tips to fresh perspectives

    • Following TikTok for financial advice is about learning to separate the real value from the misleading chatter.
    • We look at one of the more grounded voices in the TikTok financial space and discuss why her content may make practical sense for those looking to improve their financial journey -- especially women.
    Sara Khairi | November 11, 2024
    10-Q, Member Exclusive

    What practices could differentiate banks in the talent war, even if they ruffle their feathers?

    • Reports of sudden deaths among young people, including One Direction's Liam Payne, have raised alarms. A recent case in the financial sector linked to brutal work hours has particularly gained attention and unsettled the industry.
    • Banks are keen to attract top talent through job fairs and internships, yet may miss out on addressing what employees value beyond salary.
    Sara Khairi | November 04, 2024
    10-Q, Member Exclusive

    Banks are maturing in their AI journey, but is ROI still a distant goal?

    • We look at the progress banks have made on their journey toward AI maturity.
    • Traditional banks are making progress with the integration of advanced AI, but are we jumping the gun by seeking ROI from banks’ foundational AI investments at this point?
    Sara Khairi | October 28, 2024
    10-Q, Member Exclusive

    It’s that time again: Q3 earnings insights from the banking sector

    • The headline-grabber was the resurgence of trading and investment banking among Wall Street's banks in Q3 — a clear bright spot in an otherwise challenging landscape.
    • Technology and digital banking continue to be pivotal focuses for various institutions, as evidenced by discussions during Q3 earnings conference calls. As digital banking takes off, which institution will wear the crown?
    Sara Khairi | October 21, 2024
    10-Q, Member Exclusive

    How J.P. Morgan is responding to the call of underrepresented founders and consumers of color

    • How are established banks addressing the divide for underrepresented founders to create a more equitable environment for entrepreneurs today?
    • In a strategic move, JPM has announced plans to launch around 100 new branches in low-income communities. This decision stands in contrast to the broader pattern of banks pulling back their brick-and-mortar footprints.
    Sara Khairi | October 14, 2024
    More Articles