JPMORGAN TO LAUNCH A NEW DIGITAL INVESTMENT SERVICE: Banking giant JPMorgan will roll out a new digital investment service, dubbed You Invest, next week. The service will be available to everyone using JPMorgan’s mobile banking app or website, and users will get 100 free trades in their first year. People holding $15,000 or more with the bank will get this perk every year, but other users will have to pay the standard $2.95 per trade after. For comparison, TD Ameritrade charges $6.95 per trade, while Charles Schwab charges $4.95. There is no minimum required to open an account, and consumers can sign up for the service via JPMorgan’s banking app in 3 minutes, according to CNBC. They can then transfer money from Chase accounts as well as outside accounts. Additionally, JPMorgan will launch its own robo-advisor in January to help people better manage their investments.
Here’s how JPMorgan could benefit from this new service:
- It will help the bank compete with fintechs. Competition has likely spurred this new development; for example, US-based digital trading platform Robinhood already offers free trading services and now boasts 4 million customers. However, JPMorgan has a big advantage over fintechs: It’s one of the US’ biggest banks, and the new feature will be available to 47 million consumers when it launches. Additionally, consumers may trust an established provider like JPMorgan more than a fintech that has been around for several years.
- The new service will likely open JPMorgan up to new demographics. The service is targeting both millennials who have never invested before as well as customers who don’t currently invest with the bank. In early trials of You Invest, JPMorgan found that users were 15 years younger than its clients who use its human financial advisors, on average, and that 90% of users hadn’t invested with JPMorgan before. This shows that JPMorgan is likely able to dip into new demographics with You Invest.
There seems to be a shift with Wall Street banks to offer cheaper or free alternatives to their existing services. Vanguard announced in July that it’s offering commission-free online transactions on approximately 90% of all exchange-traded funds (ETFs). It seems that Wall Street giants are waking up to the fintech competition and following suit with similar services. As such, we’ll likely see more big banks and other incumbents launch new services to stay relevant and avoid falling behind in the changing financial industry.