JPMorgan CEO Dimon Willing To Spend To Fight Buy Now, Pay Later
- JPMorgan is opening its wallet to deal with the growing threat of buy now, pay later fintechs.
- BNPL players like Affirm are now adding debit cards and bank accounts.
- “We’ll spend whatever we have to spend,” JPMorgan CEO Jamie Dimon said on Wednesday.
Fintechs continue to put pressure on big banks, and JPMorgan CEO Jamie Dimon just gave a blank check to stay ahead of the increasingly popular buy now, pay later competition.
âWhen we talk about spending, we’ll spend whatever we have to spend to compete with all these people in our space,â he said, referring to the growth of BNPL players during the call for the results of the JPMorgan’s third quarter on Wednesday morning.
Dimon’s comments on buy now, pay later came as the company once again answered a host of questions about how it plans to deal with the growing threat from fintech.
“For anything that emerges, you can easily convince yourself that this is not a threat. It’s funny how layaway is back in the e-commerce payment corridor.” JPMorgan CFO Jeremy Barnum said on the call. He added that while the volume of transactions processed by buy now, pay later is only a very small part of the overall market, the company is still paying attention.
âWe are at a time when we take all types of potential disruptions very seriously, especially fintech-type disruptions,â he said.
This isn’t the first – and probably won’t be the last – time banking analysts ask Dimon what America’s largest consumer bank plans to do in the face of the growth of its fintech competitors.
When calling the bank’s year-end 2020 results in January, Dimon said JPMorgan should be “scared blue” about fintech growth, but not backing down. The company has made at least seven consumer-oriented acquisitions so far in 2021, including a deal for The Infatuation, a Zagat-owned restaurant review website, which will be integrated into the card rewards business of the Bank.
If the bank chooses to take a step, it does not lack capital. JPMorgan has an annual budget of $ 12 billion for internal technology development.
âI expect there will be very tough and brutal competition over the next 10 years,â Dimon said in January. “I expect to win. So help me, God.”
BNPL threat spills over into other areas of JPMorgan’s mainstream business, including bank accounts
The threat to banks like JPMorgan from companies that buy now and pay later extends beyond point-of-sale installment products.
For JPMorgan, that means there is more to fear than just losing credit card volumes.
âAffirm is out and it’s not just BNPL anymore; they’re going to have a debit card and a bank account attached, âsaid Dimon, referring to the company’s plan to offer a debit card that allows BNPL to spend daily and savings accounts through which he plans to ‘add cryptocurrency capabilities.
Affirm CEO Max Levchin briefed investors on the new offerings in September.
Square, meanwhile, is preparing to acquire Afterpay, which will eventually be integrated into the
digital wallet as an alternative payment method to a debit or credit card.
âThese are all different forms of competition that we have to respond to,â Dimon said.
And other banks are also forging partnerships and transactions with BNPL to stay relevant. Barclays announced a partnership with white label BNPL company Amount earlier this year. Alliance Data, a leader in co-branded credit cards, has acquired Bread so that its merchant customers can themselves offer BNPL.
Marianne Lake, one of Dimon’s main assistants and a likely candidate for CEO, told a conference in September that she was not concerned about the bank’s lag behind fintechs, given from its massive customer base and existing loan products.
âWe might not be the first to buy now, pay later, but we have the full range of payment trade and loan capabilities,â Lake said. “Longer term, I think that’s the big picture.”
BNPL, in particular, has recently gained attention after nearly two years of rapid growth. Today, BNPL accounts for just 2% of e-commerce payments in the United States, according to the FIS. But market share is expected to grow as players like Affirm and Klarna see triple-digit growth and PayPal plans to rapidly adopt its own quadruple payment product.
Barnum on Wednesday highlighted two plans JPMorgan has in place to give customers the option to pay in installments, albeit after purchase. My Chase Plan, launched in November 2020, allows credit card customers to split purchases of $ 100 or more into monthly installments for a fixed fee. And with My Chase Loan, customers can take out a personal loan on their credit card account for a lower interest rate than they would pay on card purchases.
But so far, neither JPMorgan nor other credit card companies have rolled out pre-purchase or point-of-sale payout offers, where players like Affirm and Klarna are gaining customers.
About 88% of U.S. consumers use technology to manage their financial lives, and 80% say it’s important to be able to connect their bank accounts to digital finance apps, according to a 2021 survey by Plaid and The Harris Poll.