‘It’s not old news’: Chase prioritizes better, fewer physical branches

Despite a significant uptake in mobile banking, people are still interested in branches — and while that theme might seem a little tired, it’s still very much still a high priority for JPMorgan Chase. “Branches still matter — 75 percent of our growth in deposits came from customers that have been using our branches,” chief financial officer Marianne Lake said Thursday morning on the bank’s third-quarter earnings call. "On average, a customer comes into our branches multiple times in a quarter. I know it all sounds like old news, but it’s still current news.” That doesn't mean more branches. Chase reported a 5,174 branch count, a three percent decline from the same quarter last year, and that'll continue. Chase is “continuing to consolidate, close, move, grow, change all of our branches in line with the opportunity in the market,” Lake said. In the same period, there was a six percent increase in digital users to 46.3 million and a 12 percent increase in mobile users to 29.2 million. Lake noted the importance of staying attuned to customer’s changing preferences as they concern digital channels, recognizing that "having a leading digital capability… will have an impact on significant deposits because customers value that kind of convenience very highly” and underlining that the bank is “not being complacent” to those preferences. “If customer behavior starts changing in a more accelerated fashion we will respond accordingly,” Lake said. The bank spent $1.9 billion on technology, communications and equipment expenses in the third quarter, a 13 percent increase from the year before. While that looks modest, “the investments we’re making in technology will effectively breed and deliver the efficiency,” Lake said. “To the ability were able to find incremental investments or accelerate them we’ll be willing to do that.” JPMorgan is the third most aggressive investor in fintech startups among the large U.S. banks, behind Citi and Goldman Sachs. To date it’s invested in at least 13 startups and was the lead investor in business payment network Bill.com's $100 million funding round that closed this week. On the investment banking side, it created a role for company veteran Samik Chandarana to lead the deployment of machine learning and data-based solutions throughout the organization. The company is also working to stay ahead of the curve when it comes to identity and security. Lake said it is constantly been evolving and refining its approach to fraud prevention, detection and underwriting, moving to a multi-factor protocol around customer identification and looking to put its data trove to better use in informing its underwriting decisions. As a practical matter, she said, addressing a question about the Equifax hack, there hasn’t been a significant increase in fraud. Equifax wasn’t the first horrific data breach and won’t be the last. “We’re already spending the money we need to spend to keep ahead of the curve on these things,” she said, insisting that JPM’s attitude must be proactive instead of reactive. “The combination of all the information that has been compromised over the past several years has put pressure on fraud costs but… [there’s] no impact on expenses or loan growth that would be measurable.”