JPMorgan Chase’s record growth in 2019 was fueled largely by tech and branch investments

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JPMorgan Chase closed out 2019 with 52.4 million active digital customers — up 6% year-over-year (YoY) — 37.3 million of whom use mobile banking, marking a 12% annual increase, per its Q4 2019 earnings report. Growth in digital customers decelerated slightly from the previous quarter, and growth in mobile customers was flat with last quarter.

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2019 was a stellar year for Chase — its record revenue and net income was fueled by investments in two primary areas:

• Chase had the leading tech budget of all major banks in 2019. Chase’s $11.4 billion tech budget eclipsed Bank of America’s $10 billion and Wells Fargo’s $9 billion budgets. And the firm is pouring funds into services overall: Chase’s expenses in Q4 2019 rose 4% YoY to $16.3 billion. Chase CEO Jamie Dimon noted that the firm continues to “make large investments in technology, including AI, cloud, digital and payments, as well as other investments in innovation, talent, security, and risk controls.” We think these investments in digital likely supported the uptick in mobile usage and ultimately contributed to Chase’s strong results.
• Chase added over 70 branches in 16 new markets in 2019. Chase debuted a long-awaited branch in North Carolina in Q3 2019 and expanded further in the market in Q4, with plans to ultimately add as many as 40 new branches in the region. The move was part of Chase’s larger goal to expand its branch network to cover 93% of the US population by 2022 — a plan that includes a $20 billion investment to open 400 new branches in 20 markets. Households that frequently use branches drove 70% of Chase’s deposit growth between 2014 and 2018, making them a vital channel for the bank. Continuing to prioritize its physical network could be instrumental in driving deposits going forward.

Chase appears to have successfully navigated lowering interest rates in 2019 and to be well positioned to weather uncertain economic times in 2020. 

The Federal Reserve cut interest rates three times throughout 2019 — the first time in over 10 years — to prevent an economic slowdown, which squeezed bank margins. And with a recession looming, the firm has reportedly considered relocating some of its New York workforce to more cost-efficient locations, which could be a more sustainable strategy for Chase’s operations while maintaining aggressive expansion plans to tech investments.

Looking forward, the firm has a generally positive outlook despite economic uncertainy: Dimon noted that the bank still faces “a continued high level of complex geopolitical issues,” but that “global growth is stabilized” and that “the US consumer continues to be in a strong position and we see the benefits of this across our consumer businesses.”   

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