Executive Summary

This report presents a strategic marketing analysis of JP Morgan Chase Bank. The bank is one of the largest banks in the USA and the World. The first section of the report offers an overview of JP Morgan Chase Bank and the USA’s banking industry. The second section of the report presents an external analysis of the bank. Herein the report will look at the size of the banking sector. Also, a robust customer and competitor analysis will be presented in this section.

Additionally, a PESTEL analysis of JP Morgan Chase Bank will be presented in the second section. The third section of the report will present an internal analysis of JP Morgan Chase Bank and, in particular, SWOT analysis. Lastly, the report will present a strategic marketing analysis of JP Morgan Chase Bank. Specifically, the report will offer an overview of how JP Morgan Chase Bank can leverage the available opportunities to exert a competitive advantage over its competitors.

Introduction

JP Morgan Chase Bank is an American multinational investment bank and financial services. Its headquarters are located in New York City (Sargen, 2020). It is ranked as the largest bank in the United States and among the largest in the World. It is the largest bank by assets. In its current structure, JPMorgan Chase is the result of a combination of several large US banking companies since 1996, including Chase Manhattan Bank, J.P. Morgan & Co., Bank One, Bear Stearns, and Washington Mutual (Sargen, 2020). Going back further, its predecessors include major banking firms, among which are Chemical Bank, Manufacturers. The company’s oldest predecessor institution, the Bank of the Manhattan Company, was the third oldest banking corporation in the United States (Sargen, 2020). Aaron Burr established the 31st most aged bank in the World on September 1, 1799 (Sargen, 2020). The Chase Manhattan Bank was formed upon the 1955 purchase of Chase National Bank (found in 1877) by the Bank of the Manhattan Company (established in 1799), its oldest predecessor institution. Between 2010 and 2019, JP Morgan Chase Bank increased its capitalization from approximately $165.88b to approximately $ 429.91 (Statista, 2020).

External Factor Analysis

Size of market and submarkets

In the last five years, the USA commercial banking sector has grown at an average 3.8% rate. However, the sector is expected to reduce by circa 10% within the next year because of the ripple effects of the Covid-19 pandemic (Statista, 2020). When measured in terms of revenue, the market size of the commercial banking industry was $681.1b (Statista, 2020). In terms of the value of domestic deposits, the Bank of America holds the largest market share of 10.58 %, followed by JP Morgan Chase Bank, which holds a market share of 10.21%(Statista, 2020).

Customer Analysis

JP Morgan Chase Bank customers are segmented into eight categories: investment banking, retail financial services, card services, commercial banking, treasury and security services, asset and wealth management, physical commodities, and cryptocurrency. For its investment-banking segment, JP Morgan Chase Bank has circa 8000 clients distributed in over fifty countries (Chapman, 2020). The customers in the investment-banking segment include institutional investors, financial institutions, and governments. The retail financial services sector is primarily concerned with consumer banking. JP Morgan Chase Bank has four million accounts in its retail financial services segment. JP Morgan Chase Bank, as of 2019, had close to 90 million cards in circulation (Chapman, 2020). Specifically, JP Morgan Chase Bank is the second-largest issuer of credit cards in the USA. Presently, JP Morgan Chase Bank is not involved in selling physical commodities as in 2014; the bank sold its physical commodities (crude oil operations) to Mercuria. JP Morgan Chase Bank’s decision to sell its physical commodities was informed by increasing political and regulatory pressures (Gkanoutas- Leventis, 2017).

Competitor Analysis

In the banking industry, JP Morgan Chase Bank’s key competitors are Citi Bank, Goldman Sachs, and Bank of America. Citi Bank is JP Morgan Chase Bank’s largest competitor and is headquartered in New York. It was incepted in 1812. Citi Bank’s revenue is circa 65% of JP Morgan Chase Bank’s revenues (Csi Market, 2020). Similarly, Goldman Sachs is considered as one of JP Morgan Chase Bank’s key competitors. Goldman Sachs’ revenues are circa 33% of JP Morgan Chase Bank’s revenues (Csi Market, 2020). Goldman Sachs is valued at $70.5, and in the 2019 FY, it raked in $36.5b as revenues (Csi Market, 2020). Despite being founded in 1998, Bank of America is one of JP Morgan’s Chase Bank’s key competitors and headquartered in Charlotte, North Carolina (Csi Market, 2020). Bank of America is valued at $215.7 b, and in the 2019 FY, it raked in $91.2 b as revenues (Csi Market, 2020).

PESTEL Analysis of JP Morgan Chase Bank

Political Factors

As JP Morgan Chase Bank operates in multiple countries, the bank is exposed to multiple political and systemic risks, impeding its long-term profitability. JP Morgan Chase Bank’s long-term profitability is contingent on the countries’ political stability in which it operates. When there is political instability, it is practically impossible for JP Morgan Chase Bank to conduct its operations (Frue, 2017). The bank’s profitability is also contingent on the level of regulation in the financial sector. In some countries, there are stringent financial regulations, which make it increasingly impossible for the bank to conduct its daily operations (Frue, 2017). Besides, since JP Morgan Chase Bank is a USA company, the bank’s operations are contingent on the USA’s relations with other countries. For instance, in cases where the USA has impaired operations with other countries, JP Morgan Chase Bank’s operations in those countries get threatened (Frue, 2017).

Economic Factors

JP Morgan Chase Bank’s operations are affected by both macro and micro-environmental factors. The macro-environment factors that affect JP Morgan Chase Bank’s operations include savings rate, inflation rate, foreign exchange rate, interest rate, and economic cycle (Frue, 2017). These macro-environmental factors affect the aggregate demand for banking services in an economy. They also affect the rate of investment in the country (Frue, 2017). For example, when there are low-interest rates in an economy, investors will be reluctant to make investments. The micro-environmental factors that affect JP Morgan Chase Bank’s operations mainly include competitive norms in countries, which may affect the bank’s competitive positioning (Frue, 2017).

Social Factors

Social factors mainly encompass society’s way of doing things. Some of the social factors that affect JP Morgan Chase Bank’s operations include education level, class structure, demographics, and consumer attitudes (Frue, 2017). For example, in countries where the education level of the population is high, the bank will not have difficulties getting employees with the right skills and abilities (Frue, 2017). Further, in nations where the education level is high, there will be high reception of the banking services.

Technological Factors

Technology has infiltrated all aspects of our society. Usually, the infiltration of technology in all aspects of our society results in significant disruptions (Frue, 2017). For instance, the ride-hailing services rise resulted in two new dominant players in the transport sector, namely Uber and Lyft. In the banking sector, technology has resulted in the development of web and mobile applications, which allow customers to do their banking transactions at the comfort of their phones and PCs (Frue, 2017). JP Morgan Chase Bank should leverage the myriad of opportunities provided by technology to exert its competitive advantage (Frue, 2017).

Environmental Factors

Different countries have different environmental laws and standards, which impede the profitability of the companies operating in those markets. JP Morgan Chase Bank should consider environmental factors that affect its operations in all its countries. For example, most countries in Europe provide a healthy tax break to companies involved in environmental conservation initiatives (David, 2019). Besides, the involvement in environmental conservation activities is an element of enterprises’ corporate social responsibilities (David, 2019).

Legal factors

Different countries have different legal frameworks, which affect the operations of companies. In this regard, JP Morgan Chase Bank should familiarise itself with all the legal frameworks that operate its operations in various countries. For instance, most countries in Europe have stringent data protection laws compared to the USA (Frue, 2017). Thus, JP Morgan Chase Bank should ensure that it develops measures that safeguard it from potential lawsuits.

Internal Analysis

SWOT Analysis

Strengths

Arguably, JP Morgan Chase Bank’s key strength is that it is the USA’s largest financial institution. As previously stated, it came about after a merger between Chase Manhattan Corporation and J.P Morgan and Company in 2000 (Chapman, 2020). Furthermore, JP Morgan Chase Bank is one of the USA’s oldest financial institutions with a history that dates back to 200 years (Al-Najjar & Malik, 2017). Therefore, this means that the bank is stable and has attained maturity as an organization.

Additionally, JP Morgan Chase Bank has an extensive global reach with a presence in more than 100 nations (Al-Najjar & Malik, 2017). In these countries, JP Morgan Chase Bank serves a wide range of customers ranging from small and medium-sized enterprises to institutions, corporations, and governments (Al-Najjar & Malik, 2017). Besides, JP Morgan Chase Bank enjoys a strong financial position. At the end of 2018, FY, JP Morgan Chase Bank had total assets worth approximately $2.6 trillion (Statista, 2020). In 2018, JP Morgan Chase Bank registered $32.5b as profits, which was a record figure (Statista, 2020). Besides, in the last five years, the bank has repurchased $40 b worth of stock. Subsequently, this has resulted in a 2.5% increase in earnings per share (Statista, 2020). In 2018, JP Morgan Chase Bank reported a 12% rise in its credit card sales volume and a 6% increase in its main loan portfolio (Statista, 2020).

Weakness

In the last few years, JP Morgan Chase Bank has been involved in various controversies, which have dented its public image. For example, the United Kingdom’s FSA (Financial Services Authority) fined JP Morgan Chase Bank thirty-three million pounds for its failure to protect clients’ money between 2002 and 2009 (Sarsby, 2016). Further, in 2018, JP Morgan Chase Bank experienced a technical glitch in its online banking platform, compromising customer data and information security. Several customers expressed their frustration with the issue on social networks. Moreover, although JP Morgan Chase Bank operates in more than 100 countries, it heavily depends on the USA market, which is a weakness (Al-Najjar & Malik, 2017).

Opportunities

In recent years, there has been a rise in the use of credit cards. Americans are now using their credit cards more than before. JP Morgan Chase Bank offers its customer multiple types of credit cards. In this regard, the bank can leverage the increasing demand for credit cards. JP Morgan Chase Bank should also consider exploring its geographical research to expand its market share (Sarsby, 2016). Recently, Chase Bank launched its cryptocurrency, JPM Coin, to allow customers to settle their payments. Cryptocurrency is an area of much promise in the financial and technological services sector (Al-Najjar & Malik, 2017).

Threat

As the bank operates in more than 100 countries, it faces a significant threat from its competitors. Some of JP Morgan Chase Bank’s main competitors include Wells Fargo, Citigroup, Bank of America, Goldman Sachs, and HSBC (Al-Najjar & Malik, 2017). Besides, JP Morgan Chase Bank’s key competitors’ new technologies may cause massive disruption in the financial sector, therefore threatening the bank’s position as the market leader. Moreover, since JP Morgan Chase Bank operates in more than 100 countries, it is highly susceptible to fluctuations in the currency because of the highly volatile political climates in some of the bank’s markets (Al-Najjar & Malik, 2017).

Strategic Goals

• Improve the digital customer experience
• Improve the data analytic capabilities
• Redesign the core business process

Strategies for goal achievement

As the Covid-19 pandemic has demonstrated, enhancing the digital customer experience may result in improved customer satisfaction. Arguably, most of the banks currently have web and mobile applications through which customers can conduct most of their transactions. However, adoption rates of the web and mobile applications have been low (Schmidt et al., 2017). Most customers are highly concerned about the security of their data and money when using the applications (Schmidt et al., 2017). Besides, some of the applications have multiple bugs, which impede the overall customer experience.

In this regard, JP Morgan Chase Bank should invest in the bolstering of its mobile applications to enhance the overall customer experience. In particular, JP Morgan Chase Bank should enact measures to ensure that customer information and money are well protected. The bank should also set up a dedicated customer service teams that deals with customer complaints regarding errors and failures of both the web and mobile application systems (Schmidt et al., 2017). The bank should also set up a system through which customers continually report their experience with mobile and web applications (Schmidt et al., 2017).

Unlike in the past, currently, data analytic plays a critical role in the success of retail banking. By leveraging on data analytics, JP Morgan Chase Bank can acquire a competitive advantage over its peers. Surprisingly, despite financial institutions having vast amounts of data available to them, few have fully harnessed the full potential of the insights derived from the data (Schmidt et al., 2017). In this regard, JP Morgan Chase Bank should set up a data analytics team tasked with collecting and analyzing data. The data analytic team should work with other bank departments, such as the marketing department, to realize its missions and goals. Furthermore, JP Morgan Chase Bank should ensure all of its decisions are backed up by data garnered by the data analytics team (Schmidt et al., 2017). For instance, marketing decisions should be backed up by data. Conceivably, when marketing decisions are premised on data, the conversion rates increase dramatically.

The 21st century has resulted in increased infiltration of technology in all sectors, including banking. Currently, the operations of all financial institutions are centered on customer data. Customers no longer have to go to banking halls to complete their transactions. Having many bank tellers may not necessarily result in increased customer satisfaction, as increasingly fewer customers go to the banking hall nowadays (Schmidt et al., 2017). In this regard, JP Morgan Chase Bank should invest in redesigning its critical business process to be in line with the market and technology trends.

Monitoring/Contingency Plan

JP Morgan Chase Bank needs to commission bi-monthly surveys through which the customers can report on their digital experience. The surveys will provide the bank with useful insights into whether the measures and strategies adopted have improved customer experience. Further, the data analytic team will be required to operate on their data analytic capabilities each month to the senior management. They should also report how the insights garnered from the data have been integrated into the bank’s other operations. JP Morgan Chase Bank should also set up an audit team that will evaluate whether the redesigning of the bank’s core processes has been realized. The audit team will be tasked with presenting their reports after every three months have elapsed.

References

Al-Najjar, N., & Malik, A. (2017). The US Credit Card Industry. Kellogg School of Management Cases.

Chapman, A. E. (2020). Analysis of Jamie Dimon: Impact of Leadership and Culture at JP Morgan Chase & Co.

Csi Market. (2020). Jpmorgan Chase And Co’s. Retrieved October 26, 2020, from https://csimarket.com/stocks/compet_glance.php?code=JPM

David, J. (2019). PESTEL analysis of the UK. Retrieved October, 30, 2019.

Frue, K. (2017). Pestle analysis for the banking industry.

Gkanoutas-Leventis, A. (2017). Financialisation of the Oil Market: The Four-Actor Structure. In Spikes and Shocks (pp. 109-137). Palgrave Macmillan, London.

Sargen, N. P. (2020). Why Morgan Matters. In JPMorgan’s Fall and Revival (pp. 217-230). Palgrave Macmillan, Cham.

Sarsby, A. (2016). SWOT analysis. Lulu. com.

Schmidt, J., Drews, P., & Schirmer, I. (2017). Digitalization of the banking industry: A multiple stakeholder analysis on strategic alignment.

Statista. (2020, September 28). Market share of leading U.S. banks by domestic deposits 2019. Retrieved October 26, 2020, from https://www.statista.com/statistics/727546/market-share-of-leading-banks-usa-domestic-deposits/