Even with the continuing uptick in the influence of neobanks and fintech startups, conventional wisdom has long held that traditional financial institutions have little to fear from these new players in the financial world. After all, old-school investment giants have their competition massively outclassed in resources and connections.
It may be time to finally throw conventional wisdom out with the bathwater. According to JPMorgan Chase Chief Executive Officer Jamie Dimon, his own company as well as other major investment firms lack many of the advantages of fintech startups, and their strategy will need to be relentless if they’re to end up surviving the fintech revolution.
“Neobanks, now with over 50 million accounts, bypass the Durbin Amendment and so earn higher revenue per debit swipe — and they don’t have to abide by certain other regulatory or social requirements,” Dimon explained in his annual letter to shareholders. And with new fintech firms racing ahead to bring AI and digital-first platforms to consumers, JPMorgan is faced with an unprecedented level of competition from newcomers.
Apart from the fintech challenge, Dimon’s letter also touched on geopolitical threats to JPMorgan’s business, such as the ongoing conflict in Ukraine. He also touted the firm’s recent accomplishments in the face of these setbacks, such as its increased payment processing capacity.