The largest bank in the United States, with total assets of $2.5 trillion, sees cryptocurrencies as a competitor to their services according to a new annual report filing. Under a heading “Competition,” JP Morgan says:
“The financial services industry is highly competitive, and JPMorgan Chase’s results of operations will suffer if it is not a strong and effective competitor…
Financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation…
Ongoing or increased competition may put downward pressure on prices and fees for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share.
This competition may be on the basis of, among other factors, quality and variety of products and services offered, transaction execution, innovation, reputation and price.”
This is the only mention of cryptocurrencies in the report and it took them nearly a decade to acknowledge this innovation may be more competitive than the products they provide.
They make no mention of blockchain technology as far as we can see, but their revelation that they see cryptos as a competitive threat might give a different light to comments by JP Morgan’s CEO, Jamie Dimon, who called bitcoin a fraud.
The bank, however, is a member of the Ethereum Enterprise Alliance (EEA) and has a private and permissioned ethereum based blockchain, but it seems they see cryptos themselves, rather than the wider blockchain tech, as a competitive threat.
They are not the only bank to do so. Bank of America also recently admitted cryptocurrencies themselves could be a competitor to their service, stating in an annual filing:
“The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products.”
With the bank further saying customers could go to other providers which supply crypto services or that they might be unable to adapt to changing times.
They too do not mention blockchain technology, with the acknowledgment so suggesting they might be unable to compete, perhaps because crypto’s lack of a need for an intermediary might simply have no space for a third party in payment services to the same extent current fiat digital dollars do.
But a third bank, Goldman Sachs, takes a more holistic view of this space, suggesting they might be more active in trying to adapt. In their annual filing, they state:
“We may be, or may become, exposed to risks related to distributed ledger technology through our facilitation of clients’ activities involving financial products linked to distributed ledger technology, such as blockchain or cryptocurrencies, our investments in companies that seek to develop platforms based on distributed ledger technology, and the use of distributed ledger technology by third-party vendors, clients, counterparties, clearing houses and other financial intermediaries.”
A risk they do not acknowledge, however, might be competition in their lending practices. The growing popularity of ICOs, where innovative companies can be directly funded by the people, might make their printed out of nothing loan interest charges unappealing when compared to a token economy.