- JPMorgan’s Daniel Pinto addressed payment players growing threat to big banks.
- Pinto said that while fintechs don’t face the same regulatory scrutiny, that can’t be an excuse.
- JPMorgan has increasingly sought to partner with or buy fintechs.
Fintechs have long been a thorn in the side of big banks, but JPMorgan Chase Co-President and COO Daniel Pinto says the time has come to put up or shut up.
“At a lot of the banks, we kind of slept at the wheel and allowed this to grow,” Pinto said at the Goldman Sachs Financial Services conference Wednesday, referring to the rise of payments competitors like PayPal, Stripe, Square and others that have come to dominate the market.
Pinto is the latest JPMorgan executive to weigh in on the growing threat of fintechs, echoing similar concerns that CEO Jamie Dimon, CFO Jeremy Barnum, and consumer and community banking co-CEO Marianne Lake have made in recent months.
But Pinto added that the time has come to stop complaining about competitive advantages that fintechs — which typically face less regulatory scrutiny than their large-cap counterparts — may have.
While a concern, “it’s not an excuse,” he said in reference to a question from Goldman Sachs research analyst Richard Ramsden about the lack of a level playing field. “You can feel sorry about yourself or just deal with it.”
The tone marks a shift from comments made earlier this year by JPMorgan CEO Jamie Dimon, who cited “unfair competition” as the reason for
fintech startups
‘ competitive strength.
Pinto said that while he was hopeful that banks and fintechs could someday “play by the same rules,” in the meantime he was focusing on making sure JPMorgan was playing to its strengths when competing in the space — namely, its size and wealth of resources to scale up.
“Some of the payment companies have done such a great job in the middle market and small business. As they are trying to go up market, that’s really difficult because it just requires a tremendous amount of services and a complexity of serving these companies around the world that is not so easy to compete,” he said, adding that the firm was already focusing its efforts there.
“The unlevel playing field is there, but it’s a fact of life, and I think we need to move on and do what is right and really compete with them,” Pinto said. “And I have no doubt that we can win.”
JPMorgan has changed its approach to fintechs
Since 2020, JPMorgan has either invested in or bought 10 consumer startups as it looks to build on its massive footprint in
retail banking
and asset and wealth management. Recent deals include the bank’s bids for restaurant-reviews website The Infatuation and college-planning site Frank, both announced this September.
“When we talk about expenses, we will spend whatever we have to spend to compete with all these folks in our space,” Dimon said of fintechs on JPMorgan’s third-quarter earnings call.
The moves have come as top JPMorgan executives have recognized the growing consumer appeal of new forms of payment, like buy now, pay later. The bank launched a comparable product in My Chase Plan in November 2020, through which Chase credit-card customers can split larger purchases into monthly installments for a set monthly fee.
“Do we feel like we need to innovate in the lending space to continue to provide the products and services that our customers want? Yes, we do,” Lake said at an industry conference in September.
That same month Chase exec Allison Beer took the helm of JPMorgan’s cards and connected services business. Beer, who joined the bank in 2017 after spending seven years at American Express, has shown a willingness to embrace fintech competitors as partners and a digital-first mindset shaped by her years working in payments.
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