What JPMorgan Should Do To Get Stock Market Respect

a task JP Morgan Chase & Co (JPM) is “To be the world’s most respected financial services company.” In many ways, this is really “mission accomplished”. JPM is the world The largest bank by market capitalization. that it Fifth largest bank in the world In terms of total assets – almost 4 trillion US dollars. In the 2008 financial crisis, the US government turned to the JPM for help. Just a few words of silver poetry Chairman and CEO Jamie Dimon It could lift the entire stock market — albeit for a while.

However, in the past few months, JPM has seen many signs of disrespect.

The latest episode of Disrespect came last Monday (May 23) at a full-day investor conference Failed to allay investors’ skepticism In JPM plans to invest heavily in technology.

Back in January 2022, JPM shares I started refueling When Damon announced that it was abandoning its long-standing approach to tight control of expenses and that it would spend heavily on technology. CEO Dimon has long been frustrated with the extremely high valuations of fintech companies. And it’s no consolation that JPM is valued higher than other big banks, such as Bank of America or Citigroup, when JPM is only worth a fraction of technology stocks like Apple and Microsoft (Figure 1).

Moreover, JPM’s market capitalization is growing more slowly than the tech giants, but more slowly than the S&P 500 average (Figure 2),

February 2022 AD meeting in Floridamajor shareholders told Dimon that JPM had not provided enough details about its ambitious technology spending plans, particularly the UK’s digital-only banking service, JPM.

On May 17 in Rare reprimand at JPM shareholder meetinginvestors voted against a $53 million stimulus package for Dimon, on the condition that JPM receive improved market capitalization — a condition that implies that JPM’s primary objective is growing partner the value.

Failed attempt to gain investor respect

At an investor conference last Monday, the JPM leadership team spent the day explaining JPM’s investment plans. While JPM got a one-day rally in its stock price, the overall results were disappointing.

Joshua Franklin in financial times It reported that JPM estimated that external digital losses could exceed $1 billion in the coming years. Sanuk Viswanathan, CEO of JPM for International Consumer Growth Initiatives, said digital business won’t break even until 2027 or 2028. However, JPM will financial times She stated, “Expanding the digital bank to other countries over time.”

“There is no chance,” Damon explained, “that JPMorgan is going to put 100 branches in Mumbai, Hong Kong, London or wherever and they’re really going to compete.” In fact, JPM is betting on digital because there is no other way to grow abroad.

By the end of the day, analysts were still skeptical. “The bottom line is you’re still spending a lot of money this year,” said analyst Matt O’Connor of Deutsche Bank for Dimon. “Do you do too much at once?” Asked.

“We’ve spent the whole day trying to answer that question,” Damon replied jokingly.

The missing answer to the question

Dimon’s unequivocal answer to the question was to highlight the specific differences in customer lives that JPM’s digital banking in the UK brings or will reap – benefits that customers do not get from other banks. The fact that this response was not from Damon suggests why the UK Digital Bank will not be profitable before 2027 or 2028.

To succeed in the digital realm, JPM must explain the additional benefits that customers will get from its digital banking services. JPM must rethink banking itself, given the new digital capabilities, and not just offer more traditional banking in digital form.

Moreover, in the digital age, talking about a five-year profitability horizon is like talking about light-years. Due to the rapidly changing technology, no one knows what banking services will look like in 2027.

What Damon needed – and failed – to say is: How is the life of a digital JPM customer different today. The fact that such an answer was not given and apparently was not available, indicates that JPM has not yet realized what it takes to become successful in technology. Just telling customers, “We’re JP Morgan – the world’s most respected bank: Come bank with us,” won’t get the job done.

What is JP Morgan’s mission?

As a first step toward success in technology, JP Morgan can begin with its mission statement. Its official mission of “being the most respected financial services organization” will not suffice. Furthermore, the leadership role of JPM in promoting stakeholder capitalism in August 2019 Business Roundtable Turns out it was just PR. The fact that there are different important data Elsewhere on the JPM website It suggests that JPM hasn’t really committed itself yet Which specific task.

Unfortunately, the one mission JP Morgan has shown no signs of embracing is the one that all successful tech companies have had to embrace: delighting customers.

Why customer delight is the key to success in technology

To have any chance of succeeding in the highly competitive world of technology, a company must surprise its customers by exceeding their expectations, thereby creating a positive emotional response, spreading word of mouth, leading to increased sales and profitability. Customer satisfaction – providing the same services as other businesses – will not generate these benefits.

To achieve this, the company must be Dedicated to delighting customers of the highest corporations. It’s not something that can be delegated. That’s because delivering customer happiness depends on the actions of everyone across the company.

Opportunities should be monitored when and where they occur. This means that top-down bureaucracy must be replaced by an agile network of customer-driven teams that operate across organizational boundaries.

Spending huge amounts of money on technology and new employees will not be enough. JPM’s current 277,000 employees have to adopt and act with an agile mindset.

To be successful in technology, JPM must become a different kind of company, with a different way of thinking about issues. Microsoft did it. the question is. Can JPM?

What JPM needs to gain respect for the stock market

It is clear that JPM and its CEO, Jamie Dimon, have had success in entrepreneurship inside Banking as we know it so far. The question is whether JPM can take the next step and reinvent banking for the digital age. This will require more than just offering existing banking services in digital form, or acquiring other digital banks. JPM must rethink how to reinvent banking to improve customers’ lives, using new digital capabilities. Buying technology and people won’t solve this problem, although it can help. Most importantly, everyone who is already in the company, from top to bottom, must learn to understand, love and solve their customers. they customer problemsand not just JPM.

In the process, JPM may also learn that in 2022, it’s not just tech companies that should love their customers. thus, No company is among the 30 leading companies in the Dow Experiencing significant growth in market value without a customer-driven mission. So the message for JPM is important, regardless of technology. It’s time for a mission shift.

And read also:

Why your mission statement should include customer priority

Why Customer Priority is Key to Getting the Benefits of Deep Purpose

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