Chase Bank gains more than 500k customers in its first eight months
After Eights #AfterEights
Chase Bank has attracted more than half a million current account customers in as little as eight months, new figures show.
The digital bank, part of US giant JP Morgan, launched in Britain last September and has already had more sign-ups than Monzo or Starling Bank managed in either of their first full year – although it has far more muscle behind it.
Chase already serves 56million digital customers in the US and its parent company JPMorgan manages trillions of pounds of assets.
As a newcomer to the UK banking market, some might have expected Chase Bank to make slower progress.
UK challenger Monzo Bank, which now claims to have more than 5million banking customers, gained 150,000 in its first year, albeit to its pre-paid debit card service at the time.
App based Starling Bank, which reached more than 2.1million customers last year, grew from 50,000 to over 400,000 customers in its first full year.
After eight months in the UK market, Chase now holds £8billion in customer deposits, and has processed approximately 20million card and payment transactions.
What is Chase?
The bank can chase its history back to 1799 when it was called the Bank of The Manhattan Company (New York).
It merged with Chase National Bank in 1955 – which existed separately from 1877 to 1954 – to be called The Chase Manhattan Bank.
It was bought by JP Morgan in 2000 and has seen a number of acquisitions since.
It has 4,700 branches and 16,000 cash machines, and it is one of the ‘Big Four’ consumer banks in the US.
A Chase spokesperson said: ‘We’re delighted that so many people in the UK have chosen to bank with Chase in such a short time since launch, but we’re only just getting started.
‘This shows that there is real appetite for good value banking products from a trusted brand, with around the clock customer support all delivered via an intuitive banking app.’
However, while it has gained an impressive number of customers in a short space of time, there is a possibility that many of its customers may have signed up purely for the best buy easy-access savings rate rather than with any intention of using it as their main current account.
It’s worth noting that new customers don’t have to switch their existing current account to get the 1.5 per cent rate, so savers could simply set up a Chase account as a secondary bank account.
Chase says that approximately 30 per cent of its customers are using debit cards multiple times a day, making payments multiple times a week, including bill payments in the form of direct debits, and putting in substantial savings.
That suggests that seven in 10 are not using it as their main account.
What makes Chase attractive?
Chase is likely doing well because it offers an array of benefits that would appeal to a range of people. Savers, holidaymakers, and shoppers alike.
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At the end of March, Chase Bank raised the bar for savings providers by offering an easy-access rate that blew the competition out of the water.
The savings account, linked to the Chase current account – offers savers a rate of 1.5 per cent – it remains the market leading easy-access deal on the market.
Savers can deposit up to £250,000 (although, only £85,000 is protected by the Financial Services Compensation Scheme) in total at any time and can access their savings as often as they like, with no fees, charges or loss of interest.
The account also comes with some good features, namely its 1 per cent cashback on spending for the first 12 months, although there are some exceptions.
It offers a fee-free debit card abroad so you won’t be charged any fees by Chase when using their card when traveling, including for cash withdrawals at ATMs.
It also offers an automatic regular savings function that allows customers to round up their spare change to the nearest £1 with a 5 per cent interest rate boost.
Finally, earlier this month, it introduced a referral scheme rewarding customers with £20 each time they successfully refer someone into opening a Chase current account, up to a limit of £400 in total.
The person they refer will also be rewarded £20 once they’ve joined and deposited £20 within 30 days of opening their Chase account.
However, all this is coming at a considerable cost.
JP Morgan Chase expects Chase bank to only break even by 2027 or 2028 with the bank incurring losses of more than £800million in the interim.
Although, it’s worth noting that the projected losses represent only a fraction of the bank’s £100billion revenues last year.
James Blower, founder of The Savings Guru said: ‘Chase has definitely had a strong start but it is buying its way in with some really great, but expensive financial benefits and a significant marketing spend.
‘However, I’m sure it’s hurting its competition, as it has a much stronger proposition, and it will be taking business away from other banks.
‘It’s also helping lift easy-access rates because other banks are having to fight harder to compete.
‘It will be interesting to see how long the benefits are maintained and whether we see anything new added to the Chase package.
‘What’s for certain, is that they aren’t going away anytime soon and that’s good news for savers and current account holders because, whether people open an account with them or not, they will have a knock on impact on other providers which will benefit everyone.’
There is also no minimum income requirement to open the Chase current account, however you’ll need a smartphone to run the account via the app.
The bank also doesn’t currently offer joint accounts, so it won’t necessarily work for everyone.
Your smartphone will need to run iOS 14 and above, or have access to Google Play on Android 8.1 and above, which means some devices are not supported due to hardware limitations.
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