SAN JOSE, Calif. – The “build or buy” scale is leaning increasingly towards “buy” at JPMorgan Chase, as fintechs become less concerned with disrupting traditional banks.
That’s the upshot from Adam Carson, the bank’s head of digital partnerships, during a fireside chat at Bank Innovation 2017.
“In my space, which is digital, I think you’ve seen banks build their own digital experiences, whether it’s web or mobile,” he said. “But now, there is more of a willingness to partner, where there are fintech companies that have created amazing digital experiences, leveraged next generation technology, and it sometimes makes more sense than taking the time to build it from scratch.”
Part of that willingness is the shift on the fintech side, from wanting to compete, then partner, and now simply power the banks. “We saw [fintech] companies that are almost going back to the Fiserv model, which is ‘we have no intention of competing with JPMorgan, we are a next-generation software company looking to sell and power,’” Carson said. “A lot of companies are looking at this as a traditional buyer and vendor relationship.”
But even with the increased desire to partner, the bank now only invests strategically, having established a commercial partnership with a firm beforehand.
“A lot of banks are leading with their investment arm, and then figuring out how they will use that technology,” Carson explained. “At JPMorgan, we are much more about the partnership for commercial agreement and then we’ll look for strategic investment.”
Fintech trends “inform” the bank’s strategy, rather than dictate it. “I need to understand where we are going as a business, and then I go hunt for companies that will be in line with our strategy,” he added.
A recent example of this strategy is the partnership with Intuit on launching API for secure customer data sharing.
“Our partnership with Intuit was not to change the way the ecosystem works, but to make it more secure, to have a little bit more control around it for consumer, and for having more constraints on what that third party group can do with that data,” Carson said. “But the partnership was a natural progression from when we first shared bank data on Quicken.”
Several new partnerships, many of which have been in the works for years, will be announced in 2017, Carson said.