JPMorgan “Prepared” to Compete With Big Tech

As fintech acquisitions surge and digital talent becomes harder to source, JPMorgan is feeling the crunch.

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Need to Know

  • At a recent investor’s day, JPMorgan CEO Jamie Dimon said the bank will look to expand through acquisitions with a specific focus on financial services and technology.
  • The motivation for these deals, according to Dimon, is the growing competition from tech giants such as Amazon and Google, as well as smaller fintech firms.
  • JPMorgan’s most recent acquisitions were InstaMed and WePay, in 2019 and 2017 respectively.
  • Fintech companies have been getting snapped up recently—Honey, Plaid, and Credit Karma were all acquired in the last two months.

Analysis

The biggest banks in the world are feeling the crunch from technology giants. JPMorgan CEO Jamie Dimon recently outlined a piece of the bank’s next steps, including targeting acquisitions in the financial services and technology sectors.

“We are looking, and we will be much more aggressive with acquisitions across the board,” Dimon said at a recent investor meeting. “I do think we’ll have opportunities to do that.”

Banks make acquisitions for a number of reasons—expand services, build customer bases, enter new markets, and more. But as Dimon outlined, banks are increasingly thinking about using acquisitions as a way to gain new tech talent and access to data. Banks need access to a massive technology workforce in order to be successful. Goldman Sachs recently announced its developer base grew to 10,000, representing 25% of the entire company.

Companies such as Amazon and Google are snapping up some of the best tech talent in the world, and now that JPMorgan and every other major bank are making serious digital moves, they are now up against one another when it comes to hiring the best teams.

JPMorgan is continually expanding its digital presence. Earlier this week, it announced plans to open a digital arm in the UK, and the bank has also utilized tools such as machine learning to streamline its internal processes.

“That’s the world we are going to face, and we’re prepared,” Dimon said in reference to competing against tech giants. “You’re going to get some form of competition from Apple, Amazon, Facebook, Google, WeChat, Alipay; you’re going to get it across payments, white label, black label and bank-in-a-box and marketplaces…when it comes to M&A, we should be very, very creative.”

JPMorgan is no stranger to the fintech acquisition world, though it has been fairly quiet in the last 10 years. The only two major deals included purchasing medtech firm InstaMed for over $500 million in 2019, and small business payments platform WePay for over $220 million.

Fintech has been scorching hot over the last three months alone. Just this week, Intuit purchased Credit Karma for $7.1 billion, while Visa acquired Plaid for $5.3 billion last month and PayPal bought Honey for $4 billion in November. Those moves all represented a larger payments or fintech company looking to shore up its data and talent base by making a sizeable move.

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