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“Decentralized finance and blockchain are real”, says JP Morgan CEO Jamie Dimon

Jamie Dimon believes JP Morgan should embrace the digital sphere by allocating billions of dollars to the banking giant’s tech budget as well as through a strategy of direct to consumer products that compete directly with fintech.

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Jamie Dimon/JP Morgan Chase

This time last year Jamie Dimon, the CEO of JP Morgan, one of the world’s largest banks revealed he 

saw financial startups an “enormous competitive threat to banks”, having added that his bank should be "scared shitless" by fintech 

Fast forward twelve months and, again in his annual letter to shareholders Dimon has indeed further support to the digital revolution in finance, 

“The growing competition to banks from each other, shadow banks, fintechs and large technology companies is intensifying and clearly contributing to the diminishing role of banks and public companies in the United States and the global financial system,” he said in the letter published this week. 

In particular, he argues that the bank should increasingly see the benefit to its bottom line through the adoption of blockchain bases trends such as decentralised finance, often dubbed DeFi, although made no direct mention of ‘crypto’.

“Decentralised finance and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not. JPMorgan Chase is at the forefront of this innovation. We use a blockchain network called Liink to enable banks to share complex information, and we also use a blockchain to move tokenized U.S. dollar deposits with JPM Coin,” he said.

“We believe there are many uses where a blockchain can replace or improve contracts, data ownership and other enhancements; for some purposes, however, it is currently too expensive or too slow to be deployed,” he added. 

JP Morgan Coin was launched just under two years ago at the time the bank formalised its blockchain strategy into a dedicated unit with over 100 team members.

“We continue to bring to the market and commercialise innovative products, such as embedded banking; AI-driven fraud controls and forecasting; and account validation and programmable payments on JPM Coin.” 

Over time Dimon expects this to lead to the bank achieving “double-digit market share” in payments.

Regulation remains a headache for Dimon, however, as he previously has outlined that many fintechs and non-banks - fueled by the $130bn invested into fintech last year - are able to benefit from less supervision from financial rulemakers compared to JP Morgan.

“The pace of change and the size of the competition are extraordinary, and activity is accelerating,” he said.

He also gives the example of Walmart, which “for good reason” can use new digital technologies to quickly offer banking-type services to their 200 million customers. 

“Apple, already a strong presence in banking-type services with Apple Pay and the Apple Card, is actively extending services into other banking-type products, such as payment processing, credit risk assessment, person-to-person payment systems, merchant acquiring and buy-now-pay-later offers.” 

“The large tech companies, already 100 per cent digital, have hundreds of millions of customers, enormous resources in data and proprietary systems — all of which give them an extraordinary competitive advantage.”

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