JPMorgan Chase’s fintech buying spree (2024)

Luisa Beltran

April 25, 2023 at 6:53 AM·3 min read

Good morning. Luisa Beltran here, filling in for the Term Sheet team.

This week I’ve been reporting on JPMorgan Chase, which has been on a deal spree, buying up or investing in more than 80 companies since 2021. The main reason? Competition. Jamie Dimon, JPMorgan Chase’s billionaire chairman and CEO, has long warned about the competitive threat from fintechs and Big Tech. Companies like Amazon or Google or PayPal are not constrained by legacy software, or the volumes of regulations that banks have to contend with and are free to innovate.

Dimon’s answer to this threat is to invest. JPMorgan Chase is so massive—the bank had $2.38 trillion of deposits at the end of the first quarter—that it has deep pockets to invest in adjacent businesses like UK digital wealth manager Nutmeg Savings and Investments; or 75% of Volkswagen Payments; or Frank, the financial aid site. The deals are seen as a way to access new customer bases that the main bank wants access to. That last deal—Frank—has caused some problems for JPMorgan Chase, which is now embroiled in a very public lawsuit against Charlie Javice, the 31-year-old founder of Frank (you can catch up on that story here). Regulators, namely the Office of the Comptroller of the Currency, are now scrutinizing JPMorgan Chase’s due diligence of recent deals, the Financial Times reported April 7. It’s unclear what the OCC is looking at but JPMorgan’s purchase of Frank will likely be top on its list. (The OCC scheduled the audit before JPMorgan’s lawsuit against Javice, the story said.) The bank conducted several weeks of due diligence of Frank but failed to determine exactly how many customers the startup had before buying it in September 2021 for $175 million. JPMorgan Chase and the OCC declined to comment.

But Frank was just one of many deals JPMorgan Chase has done since 2021. Most of the bank’s transactions were investments, where it bought a minority stake in a company or took part in a funding round. Surprisingly, just 16% of those were acquisitions. Many of the deals were so small they didn’t have a valuation. Some were outside of banking or fintech. There’s The Infatuation, the restaurant review site, that JPMorgan Chase acquired in 2021, or retailer Simply Organic Beauty, which JPMorgan Chase partnered with West Lane Capital Partners to buy a majority stake.