According to reports, a former senior City regulator will lead the new venture.

JPMorgan Chase & Co (NYSE: JPM), the largest bank in the US and the sixth-largest bank in the world by total assets, is planning to throw its hat in the ring of the highly competitive UK digital banking market. (SkyNews)

The US banking giant will offer Chase-branded savings and loan products in the UK during this year.

SkyNews learned from its sources that JPMorgan has already commenced discussions with regulators. These talks include the regulatory pathway for the clearance of the new bank.

A report earlier today by the FT said JPMorgan has asked Clive Adamson, former head of supervision at the FCA, to lead the new UK operations. He is currently a non-executive director at JPMorgan Securities PLC. He was previously head of the risk committee at retail lender Virgin Money until November last year.

JPMorgan’s UK entry to fire up competition

JPMorgan will wade into a highly competitive market with traditional banking incumbents taking heat from tech-heavy, low-cost, consumer-friendly fintech startups. These include Atom Bank, Monzo, Revolut, Starling Bank, and Tandem.

These new-fangled, “challenger” banks are muscling into banks’ retail market share, differentiating themselves by offering simple, mobile-based, convenient and more personalized customer experiences.

John Cronin, an analyst at Goodbody, told the FT: “The UK has lots of players but the competitive landscape is still very concentrated, and for someone with financial firepower and sophisticated lending capability there could be an opportunity to shake up the market.”

UK banking: consolidation on the horizon?

Warwick University’s Andreas Kokkinis, who specializes in corporate law and financial regulation, told Bloomberg that smaller conventional banks and building societies, and challenger banks, held a 13% market share in UK current accounts.

Traditional banks therefore still dominated this market. However, challenger banks, operate exclusively online and thus offer cheaper services. “They are popular amongst customers below the age of 37,” said Kokkinis.

“This does not necessarily mean that large banks will lose their dominant position in retail banking markets… What is more likely to happen is that large banks will acquire successful challenger banks,” Kokkinis added.

GS was off the mark earlier

According to the FT, JPMorgan’s entry comes at an opportune moment when international banks prepare to move swaths of their EU trading and lending operations out of the UK because of Brexit. Earlier this month, Germany-based digital bank N26 announced its pullout from the UK market and told its 200,000 customers to close their accounts by April 15. As per market speculation, competitive pressures forced N26 to exit the UK, though it blamed Brexit for the decision.

However, JPMorgan’s rival Goldman Sachs (NYSE: GS) has had a headstart. Goldman rolled out its Marcus brand of banking services in the UK in 2018. Marcus snapped up 250,000 British customers in its very first year and now holds more than £13 billion in UK deposits.

JPMorgan invested in fintech startups

In January, JPMorgan and UK Aid pumped $15 million into fintech accelerator Catalyst Fund. Catalyst will use the money to 30 fintech startups in Africa, Asia, and Latin America over the next three years.

Elements of the technology platform for JPMorgan’s UK digital bank are said to have been developed by 10x Future Technologies. Antony Jenkins, the former Barclays chief executive set up 10X.

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