Business Model of JP Morgan Chase

Introduction

JP Morgan Chase & Co. is an American multinational investment bank and financial services holding company. It is one of the top most NBFC’s in the world, working towards the goal of gaining from the gains from their clients. The business model of JP Morgan Chase & Co. includes its business plan, revenue model, its competitors, SWOT Analysis and many more.

It is one of America’s Big Four banks, along with Bank of America, Citigroup, and Wells Fargo.

Guide to Working at JPMorgan - Forage

Business Plan

JP Morgan Chase is considered to be a universal bank and a custodian bank. The J.P. Morgan brand is used by the investment banking, asset management, private banking, private wealth management, commercial banking, and treasury services divisions.

JP Morgan is the market leader in FICC (Fixed Income, Currency & Commodity) trading, which constitutes a bulk of its Sales & Trading revenues. The Retail Banking division of JP Morgan serves small businesses and consumers by providing traditional banking services to them through their various branch locations, ATM’s, online banking etc.

Revenue Model

It’s a Main Street bank, focusing on making loans and accepting deposits, with the majority of income coming from the difference between the yield on those loans and the cost of deposits.

A bank’s Wall Street operations tend to revolve around three types of activities. In the first case, investment banks offer advice to companies on mergers and acquisitions. They also help companies raise capital by underwriting stock and bond issuances.

Competitors

There are several brands in the market which are competing for the same set of customers. Below are the top 7 competitors of JP Morgan Chase:

1. Bank of America

2. Prudential Financial

3. Wells Fargo

4. Morgan Stanley

5. HSBC

6. Goldman Sachs

7. Citibank

SWOT analysis

Strengths

  • Stronghold in the market: It has a good reputation in the market with a strong brand name and a well-executed financial base. This helps it to expand its business in different markets.
  • Wide existence: It has its branches in over 100 different countries of the world and over 200,000 employees working under it which helps it to manage and evolve its business and make it strong.
  • Splendid services: with an experience of over 2 decades it has been providing its customers with some of the best services in the market and this helps them strengthen their bond with their customers.
  • CSR activities: JP Morgan Chase is well known for its commitment to its CSR strategies. In 2019, they invested $324.5 million in global charity and business ventures intending to contribute $1.75 billion by 2023.

Weakness

  • Large market in the US: Even though JP Morgan Chase has operations in over 100 countries, they are mainly dependent on US activities. This overreliance on the US market is also seen as a weakness. If this market experiences a crisis, the effects for the bank might be enormous.
  • Limited Success: It only has limited success in its current business and not in other markets.
  • Lack of management: JP Morgan Chase has been engaged in several incidents in recent years, between 2002 and 2009, the UK Financial Services Authority (FSA) penalized the bank $33.32 million for failing to secure billions of pounds in client’s funds. Such incidents need to be taken care of in the future.
  • Technical failure: In Feb 2018, JP Morgan Chase experienced a technical issue. Its online banking system had a security flaw that allowed certain users to gain access to other users’ account information. Customers who were affected by the problem voiced their anger on social media. Technical difficulties can occur in any organization but, when they occur in such a large company customer’s trust may be affected.

Opportunities 

  • Expansion: If JP Morgan Chase expands its business more in other countries it can catch hold of more of the market and be at the top of its industry in all aspects. This can also help it in financial stability.
  • New Services: it needs to provide its customers with new services and diversify its portfolio.

Threats

  • Changing Policies: the government can change its policies anytime which can affect the working process of the company. Thus it needs to be aware of such changes which can happen in the future.
  • Competitors: JP Morgan Chase faces a large number of competitors in the market due to its wide market spread in different countries. With the change in time, there are new companies entering the market that want to be at the top. This can create tough competition for it.
  • Financial Crisis: The company can face a financial crisis anytime in the future without its knowledge so to avoid trouble in such times it needs to have a proper financial study of its company and keep separate provisions for such times.
  • We have now completed the SWOT Analysis of JP Morgan Chase. These studies help the company to analyze and prosperous in the market.

Conclusion

JP Morgan Chase is one of the best financial service companies in the market with about 9.2% of the world’s market share. It is one of the strongest companies in the market with a good reputation and a wide reach which can still be developed by providing new services.

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