According to Jamie Dimon’s 2021 shareholder letter, Big Banks are facing big competition from FinTech. Rebecca Felton, senior market strategist at Riverfront Investment Group, and Dan Primack, business editor at Axios, joined “Squawk Box” on Thursday to discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
Jamie Dimon, JPMorgan Chase chairman and CEO, listed fintech as one of the “enormous competitive threats” to banks in his annual shareholder letter released Wednesday.
“Banks … are facing extensive competition from Silicon Valley, both in the form of fintechs and Big Tech companies,” like Amazon, Apple, Facebook, Google and Walmart, Dimon wrote, and “that is here to stay.”
Fintech companies, in particular, “are making great strides in building both digital and physical banking products and services,” Dimon said. “From loans to payment systems to investing, they have done a great job in developing easy-to-use, intuitive, fast and smart products.”
This, in part, is why “banks are playing an increasingly smaller role in the financial system,” he said.
Fintechs, like Stripe, Robinhood and PayPal, have seen a lot of growth and success in recent years, which may present challenges to traditional banks.
While traditional banks have “significant strengths,” like “brand, economies of scale, profitability and deep roots with their customers,” Dimon also acknowledged their weaknesses. Things like “inflexible ‘legacy systems’” along with “extensive regulations,” can hinder innovation within banks, though they can arguably also make banks a “safer” option for consumers, too.
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