The rapidly accelerating global fintech market has shaken up the financial world tremendously and has demanded long existing financial institutions to reevaluate how they do business and the services they offer customers. The pandemic has been one of the leading causes of this rapid fintech acceleration, as many people worldwide have begun preferring to do all financial transactions and services strictly remotely and contactless to reduce unnecessary exposure to the virus. Cryptocurrency, and especially bitcoin, have also seen remarkable growth ever since Tesla and SpaceX CEO Elon Musk decided to purchase over €1.3 billion worth of bitcoin and announced that Tesla will soon accept it as a payment method from customers. This has led companies like MaserCard to make statements on how they plan to proceed with cryptos, most detailing that they will accept them as long as they meet a long list of criteria to ensure safety and security in transactions. Now, JPMorgan Chase must make key decisions about how they will tackle the fintech sector before being left behind rather quickly.
So far throughout 2021 JPMorgan Chase has actually seen a lot of success, as many investors are under the belief that interest rates and inflation rising will lead to more revenue for the company. To reflect this, the stock has risen over 21% from just the start of the year. However, all banks, not just JPMorgan Chase are threatened by the fintech wave, based primarily on the fact that could-based software companies are able to move money with ridiculously thin margins, which banks can’t compete with. Chase has claimed they have success with fintech, as they now have currently over 55 million online users. But, with Berkshire Hathaway’s Warren Buffet leaving banking and Chase Pay, similar to the likes of Apple and Android Pay, failing, it seems like they are having a difficult time finding their footing. Even JPMorgan chairman Jamie Dimon has stated that they have the right to be scared of fintechs, namely PayPal, Stripe, Square, Apple, and Amazon to name a few. Visa is now worth more than the traditional JPMorgan Chase bank, while PayPal is now worth more than half of them. The transition for JPMorgan Chase into the cloud space with reduced margins, as opposed to typical brick and mortar banks and offices has not been easy and remains an uphill battle for the company. As of now, the optimism in JPMorgan Chase comes from market trends, and not on their future fintech decisions, which they must work on to remain this upward momentum far after the pandemic.