Essay on J.P Morgan: Leading B2B and B2C Bank, Understanding Market Demands

Introduction

J. P Morgan is the second-largest bank in the world and the biggest in the United States. In the financial and banking sector, J.P Morgan has been a leading brand since its inception in 2000 (JP Morgan, 2020b). J.P Morgan, as a leading commercial service provider, uses business to business (B2B) and business to customer (B2C) model to serve it clientele (King, 2018). Most of the bank's success has been attributed to keenness to understand and respond to the market demands. One of the applications most relevant to the bank is its customer segment.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

The company boasts a wide array of customers, which include wealthy clients such as Brokerage and wealth management firms, institutional asset management companies as well as investor and market service providers. According to Sia et al. (2016), the bank offers a wide array of services in commercial banking and consumer business to distinguished clients dealing in services, such as real estate banking, corporate client banking, government banking, and equipment finance (JP Morgan, 2020b). Moreover, J.P Morgan offers financial services to consumers in retirement and investment services, education finance, as well as small and medium enterprises financing.

Despite the bank's reputable clientele, the bank has shifted its focus from offline banking services to a digitized banking model. Azar, Raina & Schmalz (2019) observed that in the past few years, the bank has increased funding to hire, train, and retain most of its technical staff to enable its digital transition. In a report, King (2018) stated that J.P Morgan is one of the few banks that have invested the most to rank the best in digital banking and online financial services. According to King (2018), this move is fueled by the fact customers no longer rely on banks for financial assistance. Its strategic digitization has resulted from a surge in financial technology firms offering the same financial services as banks, with most of the clients shifting to online and instant services.

Additionally, trends towards digitization are opening up a formerly closed financial sector where only banks with a sizable financial ability could offer certain business services. Donnellan and Rutledge (2019) observe that this trend opened up more financial services and products, thus, allowing the entrance of non-banking firms into the financial sector. As a result, J.P Morgan and Chase Co. have begun a digital push to revolutionize its service operations (King, 2018). The bank has aimed at developing its "Mobile First' approach to financial services to cater to its customer base projected to be over 73% of Americans between ages 18-34 years (Donnellan & Rutledge, 2019).

As a result of this move, the bank has out-competed its closest rivals by close to 12 million active digital service users. Donnellan & Rutledge (2019), when writing about a case of the resource-based view and competitive advantages in banking, suggested that J.P Morgan has moved from traditional fee-based banking by creating a digital ecosystem that targets new-age clients worldwide. According to Sia et al. (2016), the bank has continued to release several financial services that help it to attract customers from various sectors. Recently, the bank issued several services and modalities, including mobile applications targeting the majority of the American youth bankers (King, 2018). It also released ChasePay, a digital wallet for use by entrepreneurs and small businesses.

However, in recent years, the bank has struggled to attract affluent clients into digital banking, as most of them have surpassed the digital age. However, this has changed recently with the introduction of branded credit cards and loyalty cards. According to Sia et al. (2016), the bank has recorded a 22% rise in client engagement since the introduction of multiple client credit cards to serve as access to the bank's financial service network. Through this service, the bank offers its high-end clients a maximum of twenty credit cards (King, 2018). These credit cards are used to access a wide variety of financial services from the bank and its partner services globally.

J.P Morgan's Competition

J. P Morgan and its partners operate in a highly competitive market environment. In the financial sector, the bank competes with banks, brokerage firms, investment banks, and hedge funds, offering the same services as they provide. According to Azar, Raina & Schmalz (2019), J.P Morgan has managed to compete based on the quality of their products and services. The bank, through its digital revolution and streamline services, has managed to out-compete other competitors on transaction execution, innovation, and product prices.

One of the significant competitors challenging J. P Morgan is Wells Fargo, a wealth management firm operating in the United States and the rest of the world. According to Donnellan & Rutledge (2019), the company recorded a 48.2% revenue growth to 85.1 billion in revenue. However, the company challenge was not a match for J. P Morgan and Chase Co.'s range of products and services, which saw the company grow its revenue to 115.6 billion in the same period (Donnellan & Rutledge, 2019).

In the financial services, J.P Morgan faces competition from major banks in the United States, England, and South America as it is involved in many trade sectors. However, recently, the move to digital currency and mobile finance has caused the bank to divert its attention to emerging technologies and customer-oriented service models to stay ahead of the competition. According to Azar, Raina & Schmalz (2019), the bank has gone ahead to develop its blockchain with the use of its bank coin.

Moreover, some of the competitors in wealth management and asset financing in England and the United States have continued to emulate the trends set by J. P Morgan. However, that trend has changed in the recent past, with the bank experiencing competition from non-banking financial service providers disrupting the industry. In the recent past, J. P Morgan has invested heavily in online transactions by acquiring financial technology companies such as WePay to help it weather competition from large firms such as Goldman Sachs and Morgan Stanley bank (JP Morgan, 2020b).

Recent Events

In 2019, J.P Morgan embarked on a plan to build an electronic forex trading and pricing engine, which was intended to speed up trade executions for the company's clients. In April 2020, the company announced that the forex engine is operational in Singapore with the endorsement of the monetary authority of Singapore. The electronic forex trading engine is said to be one of four trading infrastructure set up by the bank around the globe (Azar, Raina & Schmalz, 2019).

In another event, the company has announced that it has opened its china branch for business. On March 20, 2020, the company announced that it had commenced operations providing clients with a set of financial products and services. According to the company's website, it will continue to offer securities brokerage, sponsorship, and securities underwriting (JP Morgan, 2020b). Besides, the company announced that it would continue to invest in research in the Chinese economy with investments aimed at equity business, system enhancement, and platforms to provide liquidity in Chinese markets.

In the wake of the Covid-19 pandemic, J.P Morgan has moved to caution its clients and workers through a raft of measure announced through its website. The company announced that it would put in place some of its resilience plans for various scenarios (JP Morgan, 2020a). These measures are intended to ensure that the bank and its affiliate organizations continue to execute their functions even during the pandemic. The company indicates that all international travel for employees had been restricted with a recommendation against domestic travel in all their operation regions worldwide (JP Morgan, 2020a). The plan was informed by the information from the leadership and the center for disease control.

Another precaution set by the company is the cancellation of events and meetings planned by the company for the year 2020 (JP Morgan, 2020a). The company announced that it would be reviewing meetings scheduled over every four to six weeks to caution and inform its staff over expected changes and developments (JP Morgan, 2020a). Moreover, the company stated that it would support employees and clients to achieve their ambitions by offering free remote access facilitation for work and essential services.

Summary

Since its establishment is 2000, J.P Morgan has maintained a steady leadership role in the financial service industry with a global outreach (JP Morgan, 2020b). Due to the bank's vast array of service and product diversification, the company has continued to serve in major markets around the globe, offering cutting edge solutions to all its customers regardless of their geographical locations. In recent years, the company has increased its product range enabled by the need to improve their services.

Also, the bank's uptake of technology and hiring technical staff to enable a digital ecosystem has contributed to an unprecedented domestic growth experienced in the decade (JP Morgan, 2020b). A move to develop a digitized banking ecosystem has enabled the company to grow its portfolio to include services to sectors such as real estate and small and medium enterprise funding. With its growth in mobile services, J.P Morgan has continued to dominate the financial service sector by a considerable margin ahead of its competitors.

However, recently, the company has had to weather competition from new companies entering the financial services sector. Financial technology companies have disrupted the industry causing the bank to devise new ways of coping in the market. Additionally, competition from traditional banking service providers has grown due to the emergence of new technologies such as digital currencies and blockchain technology in the industry. According to Azar, Raina & Schmalz (2019), the company has been forced to make acquisitions of digital finance startups to strengthen their grip on the market.

References

Azar, J., Raina, S., & Schmalz, M. C. (2019). Ultimate ownership and bank competition. SSRN, 2(5), 1-87 http://dx.doi.org/10.2139/ssrn.2710252.

Donnellan, J., & Rutledge, W. L. (2019). A case for resource-based view and competitive advantage in banking. Managerial and Decision Economics, 40(6), 728-737. DOI: 10.1002/mde.3041

JP Morgan, (2020a). Measures we're taking amid COVID 19. https://www.jpmorganchase.com/corporate/news/pr/measures-we-are-taking-amid-covid19.htm

JP Morgan, (2020b). JP Morgan Chase Closes Instamed Acquisition. https://www.jpmorgan.com/commercial-banking/news-eventsKing, B. (2018). Bank 4.0: Banking everywhere, never at a bank. John Wiley & Sons.

Sia, S. K., Soh, C., & Weill, P. (2016). How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive, 15(2), 10-37. https://aisel.aisnet.org/misqe/vol15/iss2/4