JPMorgan takes on British rivals with launch of digital bank Chase

* U.S. retail banking giant makes first overseas foray

* UK seen as testing ground for global expansion -CEO

* Bank will face thin margins, tough competition

By Lawrence White

LONDON, Sept 21 (Reuters) - JPMorgan is challenging
British rivals on their home turf with the launch on Tuesday of
its long-awaited digital retail bank, Chase, as part of what the
U.S. lender hopes will be a global expansion.

The launch marks the first foray into retail banking outside
North America by one of the United States' most dominant
lenders, heaping pressure on British incumbents such as Lloyds
, Barclays, NatWest and HSBC
which are already battling low interest rates and upstart
digital rivals.

“We have been watching in which markets customers are really
ready to do their banking primarily through digital channels,
and the UK frankly leads the way in this respect” said Sanoke
Viswanathan, chief executive of the new Chase bank venture.

The venture, if successful, could see the U.S. bank expand
into continental Europe and then globally, he said.

“This is a business that we are building not just for the UK
but hopefully for the rest of the world, and there is a great
confluence of talent here across the different product
functions, so it’s a great place to build a global headquarters
for this new business,” he said.

JPMorgan will tempt customers to sign up for the fee-free
accounts with introductory offers, including 1% cashback on
debit card spending and 5% interest on small change rounded up
from their purchases and set aside in a separate savings pot.

"With a strong technology platform, significant financial
resources and a global brand name, JPMorgan could be a serious
player in the UK retail banking space," Nic Ziegelasch, Analyst
at broker Killik & Co said.

The Wall Street giant enters a competitive British market
with razor-thin margins caused by low central bank interest
rates and a tradition of free current accounts, as opposed to
most global markets where customers pay for even basic services.

“The market structure in the UK is such that you have to
generate economies of scale, there are profits to be made but if
you are subscale or have a high cost infrastructure you’re not
going to make it work,” Viswanathan said.

JPMorgan is following U.S. rival Goldman Sachs, which
scooped up billions of pounds in deposits when it launched its
Marcus digital bank in Britain in 2018 with a
then-market-beating interest rate of 1.5% on savings.

It will also compete with digital-only banks such as Monzo,
which has attracted around 5 million customers with its
signature coral pink cards and user-friendly app, but struggled
to turn that into steady profits.

The bank has already hired some 500 staff in Britain,
Viswanathan said, and will add more as it builds up its customer
support teams.
(Reporting By Lawrence White;
Editing by Bernadette Baum)