U.S. Banks Answer 2020 with Digital Innovation

JPMorgan Chase, Bank of America, Goldman Sachs, and others helped clients weather the pandemic by rolling out tools like digital wealth planners.

As online commerce and business took precedence in 2020, banks and financial institutions had to keep pace, working to accommodate new payments processes and workflows that transitioned to digital-first (and, in many cases, digital-only). Paperless invoicing and accounting became the norm, while contactless payments were prioritized by retailers across the board. Meanwhile, the needs of consumer banking customers changed drastically, as the financial insecurities wrought by COVID-19 altered personal budgeting and financial goals for many around the world.

The changes implemented by banks around the world were swift, responsive, and efficient, designed to accommodate not only a present in which digital finance has suddenly become the norm but a future in which this will most likely remain the case.

JPMorgan Targets POS Market with QuickAccept Card Reader

  • JPMorgan Chase launched a smartphone card reader and app, in direct competition with payment facilitators such as Square and PayPal.
  • QuickAccept lets merchants accept card payments either through a mobile app or a contactless card reader.
  • The service is free; competitors such as Square typically charge a 1.5% fee.
  • JPMorgan will soon migrate many of its more than three million small business customers to QuickAccept.

In October, JPMorgan Chase launched a new product, QuickAccept, which allows businesses to accept payments using a card reader or mobile app. The launch of QuickAccept came from JPMorgan’s business branch, Chase for Business, and was part of the launch of Business Complete Banking, a new chequing account for small businesses. The service, which is free, is a direct competitor to existing services such as Square, Clover, and PayPal.

The launch, JPMorgan said, was part of the bank’s efforts to support small businesses during a period of unprecedented challenge. “Especially in the challenging times we’ve seen in 2020, helping small business clients make every sale has been our priority,” Max Neukirchen, CEO of JPMorgan’s merchant services arm, said in a statement. Neukirchen also noted that QuickAccept’s lack of a fee was a great differentiator when comparing the product to offerings from competitors.

JPMorgan to Launch U.K.-Based Digital Bank in Early 2021

  • JPMorgan will launch its Chase-branded entry into the U.K. consumer banking space in the first quarter of next year.
  • The finance giant has already partnered with suppliers including Amazon Web Services and 10x Future Technologies for digital infrastructure.
  • JP Morgan already operates as a digital consumer bank in the U.S., where it has 50 million customers.

JPMorgan announced plans to expand its online offerings in the U.K., revealing that it would launch its entry into the U.K. consumer banking space in early 2021. JPMorgan’s consumer offering in the U.K. will be Chase-branded and, in August, the bank had apparently already partnered with several vendors, including Amazon Web Services and 10x Future Technologies—which is a London-based banking tech startup—for digital and cloud-based infrastructure. 

There had been talks of JPMorgan entering the digital consumer banking space since early 2020. The financial institution is already experienced at offering digital consumer banking: the company already has more than 50 million consumer banking customers in the U.S., where it claims an online account can be set up within five minutes—a huge boon during COVID-19, when speed and ease-of-use can be the difference between a customer using services, or choosing another institution, in an increasingly competitive digital field.

Goldman Sachs Transforms Consumer Banking with Marcus App

  • In January, Goldman Sachs launched a long-awaited mobile app for Marcus, its first consumer-facing banking platform.
  • Later that month, the bank announced the development of a digital wealth management tool accessible through the Marcus app, as well as plans for a digital checking account to be made available in 2021.
  • Marcus Insights, launched in September, gives Marcus app customers a top-down view of all of their financial accounts, even at multiple institutions, and offers spending and budgeting insights.

Goldman Sachs, the financial institution best known for its investment and commercial banking services, made a significant foothold in consumer banking with Marcus, its consumer-facing platform. Early in 2020, Goldman debuted the mobile app for Marcus, adding a digital wealth management tool shortly thereafter. In September, the bank rolled out a new personal finance tool update to Marcus and plans to add a digital checking account to the app in 2021.

Like JPMorgan, Goldman Sachs has recognized that digital-facing consumer banking is a huge untapped market for financial institutions that have largely focused on business and investment banking. Eric Lane, global co-head of the consumer and investment management division, told investors in January that Goldman Sachs aspires “to be the leading digital consumer bank.”

Goldman Sachs Seeks to Replicate Apple Card with BaaS Offering

  • Goldman publicly released APIs that allow developers to integrate the bank’s services into their own products, with the Goldman-operated Apple Card acting as a prime example.
  • Clients will able to easily open Goldman accounts and access the bank’s automated payments system.
  • The strategy, called banking-as-a-service (BaaS), is part of Goldman Sachs’ push into corporate and consumer banking.
  • Goldman first unveiled its BaaS plans at an investor day earlier this year.

Goldman has made a bid to enter the hugely lucrative world of corporate cash-management, announcing that it will release banking services software to clients that allow businesses to integrate Goldman’s services into their own products. Goldman will publicly release its APIs to developers, who can then build Goldman’s automated payments system into their own products. The move will allow Goldman to begin managing cash for corporations, an industry worth $32 billion a year.

Banking-as-a-service (BaaS) was among the leading trends in finance in 2020, and for Goldman, could also help the bank accelerate its move into corporate and consumer transaction banking. Plus, in entering the banking-as-a-service market, Goldman positioned itself as a strong competitor to companies such as Green Dot and BBVA—fintechs and digital banks that, unlike Goldman, lack a banking license.

Wells Fargo Emphasizes Digital With Organizational Restructure

  • Wells Fargo announced a new organizational restructuring, including five new line-of-business CEOs.
  • The bank also launched an entire department focused on digital innovation.
  • Wells Fargo’s EVP & head of innovation sees AI as a central focus for banking innovation moving forward.
  • As of February, 43% of Wells Fargo’s customer base used online banking. 

In February, Wells Fargo, unveiled a new organizational structure and digital strategy, starting with a whole new department focused on digital innovation. Wells Fargo CEO Charlie Scharf explained that the new model will have five line-of-business CEOs in Consumer and Small Business Banking, Commercial Banking, Corporate & Investment Banking, Wealth & Investment Management, and Consumer Lending. Plus, the financial institution launched a new Strategy, Digital Platform & Innovation group, designed to enhance “the company’s focus on planning for the digital future and investing in the customer experience.” 

The move to direct an entire department to digital innovation signalled a new long-term strategy for Wells Fargo to incorporate digital-first thinking into every department’s priorities—a strategy that proved prescient as 2020 unfolded. The bank, however, is no stranger to online banking: as of February 2020, 43% of Wells Fargo’s total customer base already used online banking.

Citi Embraces Robo-Advising With New Citi Wealth Builder

  • Citi launched Citi Wealth Buildera new low-cost digital investing platform.
  • The app was developed in partnership with Jemstep, a fintech firm that specializes in robo-advisor products
  • With over 200 million customer accounts, Citi joined a number of other banks and apps offering automated investing services.

Citi launched a new digital investing platform with an initial investment of just $1,500. Citi Wealth Builder is an easy-to-use, low-cost investing platform that works with new and existing clients to start investing and meet their retirement goals. With no advisory fees and an initial investment of just $1,500, customers can start investing in a matter of minutes. The new app matches customers to one of six portfolios based on their responses to finance-related questions.

The tool followed Goldman’s Marcus onto the market, and mirrors the function of similar, more well-established digital investment platforms such as Wealthsimple. John Cummings, Head of Citi U.S. Consumer Wealth Management, called the launch of Wealth Builder “part of Citi’s holistic approach to banking and wealth management”—an approach that has a keen focus on digital.

Bank of America Unveils Digital Financial Planning Tools

  • Life Plan, Bank of America’s new planning tool, allows clients to set financial goals within Bank of America’s website and mobile app.
  • The tool monitors spending and budgeting in real-time and allows users to adjust their financial goals accordingly.
  • Users can schedule in-person conversations with Bank of America representatives using Life Plan through the BoA app or website.
  • During Life Plan’s pilot launch, the tool led to more than 3,800 referrals for conversations with bankers.

Bank of America made its financial planning tools available to a wider cross-section of its clientele. in 2020, launching a digital tool, Life Plan, that allows users to set and track goals in real-time on the bank’s mobile app and website. Life Plan lets clients set multiple goals—such as homeownership and retirement—which are then combined with Life Plan’s trove of existing customer data. Using machine learning, the tool then allows users to track and modify goals alongside real-time data on spending and financial management.

The use of AI was a popular strategy among financial institutions this year, as machine learning provided a more accurate, timely way for banks to respond to customer requests and common concerns. Bank of America worked consistently to increase its digital offerings and capacities throughout 2020, announcing in January plans to double its market share through a robust digital strategy, which included investments in AI and mobile app infrastructure.