JPMorgan Chase (JPM) CEO Jamie Dimon says big banks face a major threat from fintech rivals, as banks play a smaller role in the financial system. JPM stock rose.
In a letter to shareholders, Dimon admits new fintech rivals have done a “terrific job” in developing easy-to-use, intuitive, fast and smart products for a wide range of products, from loan payments to investing.
He cited, among other things, fintech’s ability to merge social media and integrate data with other platforms rapidly.
“Banks have enormous competitive threats — from virtually every angle,” he said. “Fintech and Big Tech are here … big time!”
Big Tech companies such as Amazon (AMZN), Apple (AAPL), Facebook (FB) and Google (GOOGL) as well as top retailer Walmart (WMT) yield enormous power with their ubiquitous platforms and endless data, he says.
“At a minimum, they will all embed payments systems within their ecosystems and create a marketplace of bank products and services,” Dimon said.
But while many banking products are moving out of the traditional financial system, it also means new competitors are assuming more risk, he noted.
“Banks are reliable, less-costly and consistent credit providers throughout good times and in bad times,” Dimon wrote. “More important, transactions made by well-controlled, well-supervised and well-capitalized banks may be less risky to the system than those transactions that are pushed into the shadows.”
Shares rose 0.5% to 153.27 on the stock market today. JPM stock is extended from a 141.20 buy point from a cup base but offers an alternate entry from a four-weeks-tight pattern at 161.79, according to MarketSmith chart analysis.
Among other top bank stocks, which will report earnings next week, Wells Fargo (WFC) dipped 0.4%, Citigroup (C) lost 0.7%, and Bank of America (BAC) was flat. Investment banking giant Goldman Sachs (GS) was down 1%.
Dimon also said stock market valuations are “quite high,” thanks to excess savings making it into equities. He sees the current economic boom in the U.S. lasting into 2023, but that tougher times are ahead.
It’s hard to justify the price of U.S. debt because of two factors, Dimon says. “First, the huge supply of debt that needs to be absorbed, and second the non-unreasonable possibility that an increase in inflation will not be just temporary,” he explained.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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