Question

write about chase bank as a whole, Competitive   Segments : Is the end product highly differentiated (e.g., toothpaste—low price, medicinal, whitening, good tasting)? If so, entry from outside the industry is difficult.

Answer 1

JPMorgan Chase (JPM) is a major global bank holding and financial services company. It is a universal banking company that provides commercial, retail, and investment banking services. It is one of the four principal money center banks in the United States, along with Wells Fargo, Bank of America, and Citigroup. With more than $2.3 trillion in assets, JPMorgan is one of the 10 largest banks worldwide.

The company, as we know it today, is the result of a series of mergers of a group of major U.S. banks. It is one of the four major banks in the United States, along with Citibank, Bank of America, and Wells Fargo.

JPMorgan had a market capitalization of $261.7 billion as of May 15, 2020. The company reported consolidated net income of $36.4 billion for the 2019 fiscal year.

Business Segments Description

Investment Bank

JPMorgan Chase is one of the world’s leading investment banks, as evidenced by the breadth of its client relationships and product capabilities. The Investment Bank (“IB”) has extensive relationships with corporations, financial institutions, governments and institutional investors worldwide. The Firm provides a full range of investment banking products and services, including advising on corporate strategy and structure, capital raising in equity and debt markets, sophisticated risk management, and market-making in cash securities and derivative instruments in all major capital markets. The IB also commits the Firm’s own capital to proprietary investing and trading activities.

Retail Financial Services

Retail Financial Services (“RFS”) includes Home Finance, Consumer & Small Business Banking, Auto & Education Finance and Insurance. Through this group of businesses, the Firm provides consumers and small businesses with a broad range of financial products and services including deposits, investments, loans and insurance. Home Finance is a leading provider of consumer real estate loan products and is one of the largest originators and servicers of home mortgages. Consumer & Small Business Banking offers one of the largest branch networks in the United States, covering 17 states with 2,508 branches and 6,650 automated teller machines. Auto & Education Finance is the largest bank originator of automobile loans as well as a top provider of loans for college students. Through its Insurance operations, the Firm sells and underwrites an extensive range of financial protection products and investment alternatives, including life insurance, annuities and debt protection products.

Card Services

Card Services (“CS”) is the largest issuer of general purpose credit cards in the United States, with approximately 94 million cards in circulation, and is the largest merchant acquirer. CS offers a wide variety of products to satisfy the needs of its cardmembers, including cards issued on behalf of many well-known partners, such as major airlines, hotels, universities, retailers and other financial institutions.

Commercial Banking

Commercial Banking (“CB”) serves more than 25,000 corporations, municipalities, financial institutions and not-for-profit entities, with annual revenues generally ranging from $10 million to $2 billion. A local market presence and a strong customer service model, coupled with a focus on risk management, provide a solid infrastructure for CB to provide the Firm’s complete product set – lending, treasury services, investment banking and investment management – for both corporate clients and their executives. CB’s clients benefit greatly from the Firm’s extensive branch network and often use the Firm exclusively to meet their financial services needs.

Treasury & Securities Services

Treasury & Securities Services (“TSS”) is a global leader in providing transaction, investment and information services to support the needs of corporations, issuers and institutional investors worldwide. TSS is the largest cash management provider in the world and one of the top three global custodians. The Treasury Services business provides clients with a broad range of capabilities, including U.S. dollar and multi-currency clearing, ACH, trade, and short-term liquidity and working capital tools. The Investor Services business provides a wide range of capabilities, including custody, funds services, securities lending, and performance measurement and execution products. The Institutional Trust Services business provides trustee, depository and administrative services for debt and equity issuers. Treasury Services partners with the Commercial Banking, Consumer & Small Business Banking and Asset & Wealth Management segments to serve clients firmwide.

Asset & Wealth Management

Asset & Wealth Management (“AWM”) provides investment management to retail and institutional investors, financial intermediaries and high-net-worth families and individuals globally. For retail investors, AWM provides investment management products and services, including a global mutual fund franchise, retirement plan administration, and consultation and brokerage

JPMorgan deals with industry competition in three main ways:

• By distinguishing itself in the marketplace primarily on the basis of its history and experience
• By staying on the cutting edge of offering customer convenience and low-cost and cutting-edge services
• By acquiring smaller banks, thereby removing some potential competition from the marketplace

JPMorgan addresses the issue of customer bargaining power primarily by extending attractive sign-up offers to new clients. It also makes efforts to get existing clients to open additional accounts and sign up for additional services, which effectively increases the switching cost for consumers by making it more troublesome for them to transfer their finances to another bank.

JPMorgan Chase’s businesses generally compete on the basis of the quality and range of their products and services, transaction execution, innovation and price. Competition also varies based on the types of clients, customers, industries and geographies served. With respect to some of its geographies and products, JPMorgan Chase competes globally; with respect to others, the Firm competes on a regional basis. The Firm’s ability to compete also depends on its ability to attract and retain professional and other personnel, and on its reputation.

The financial services industry has experienced consolidation and convergence in recent years, as financial institutions involved in a broad range of financial products and services have merged and, in some cases, failed. This is expected to continue. Consolidation could result in competitors of JPMorgan Chase gaining greater capital and other resources, such as a broader range of products and services and geographic diversity.

The Threat of New Entrants to the Industry

The threat of new entrants from within the financial industry is relatively small. It isn't easy for a new bank to enter the market and try to compete on the same level as JPMorgan. In fact, a new competitor would face a number of significant obstacles, notably the massive amount of capital required, the length of time needed to establish a significant brand identity, and the cumbersome government regulations that apply to the operation of banks.

While brand new entrants may not be much of a threat, JPMorgan does have to brace for some competition from already established banks in other countries. For instance, the company must keep an eye out for major banks in developing economies such as China that will eventually compete on an international scale.