Although many big banks have been hesitant to dive headfirst into the cryptocurrency craze, it is nonetheless true that even the most stalwart financial institutions are beginning to recognize that the future of the financial world is becoming increasingly digital. According to Quartz, JPMorgan announced late last week that it would introduce a new partnership with PayPal, the latest in the efforts of a number of major financial institutions to shift their focus from the physical space to the digital world.
JPMorgan, Bank of America Expand Mobile Customer Bases
This latest announcement continues the broader trend in which banks like JPMorgan (JPM) and Bank of America (BAC) close down physical branches in order to make more of an investment in digital wallets and mobile phone investing among customers.
Both of these institutions reported double-digit percentage gains in their customer bases on mobile platforms this year as compared with one year ago. Bank of America saw an increase in its mobile-only customer base by nearly 15%, while its customer base using exclusively physical branches declined by almost 5% in that time frame.
The shift may have come about as a result of increasing pressure from new competitors. Apple and Venmo have grown their impact in the digital financial services realm in recent years. Banks that are interested in retaining customers have found that they need to make banking services more readily accessible, and this often means adapting mobile platforms and digital services to the customers’ needs.
Zelle and Other Services
One new service designed to help big banks retain customers is Zelle, which allows users to send payments to one another across different bank accounts and with rival banking apps. It’s a bit like Venmo or another payment transfer service, with the emphasis placed on ease-of-use for the customer.
Former Barclays CEO Antony Jenkins is among those leaders in the financial world who believes that the transformation of the way banking is done is along the lines of the disruption that Uber introduced into the taxi business. He suggested in an interview with Bloomberg Television that banks are spending large amounts of money to keep up with their new competitors, but that some may not have the correct “culture or mindset” to stay ahead of the curve.
At the same time, billions of dollars of investor funds have gone toward new fintech startups in recent years, with major institutions on Wall Street among the largest supporters of new startups and their technologies. If smaller competitors should come in to take over customers from traditional banks, it would very likely be surprising to almost no one.