It was January 2021, and JP Morgan’s CEO Jamie Dimon had a message for his management team on a conference call to discuss fourth quarter earnings. Dimon, who is known for his directness, said he told his management team they should be “scared shitless” about the threat from a new generation of fintechs like PayPal, Square and Stripe. Then, in a shareholder letter issued three months later, Dimon further noted the diminishing role of banks in the global financial system. Banks, including JPMorgan Chase, were under enormous competitive threats from every angle, Dimon wrote. He pointed to fintechs and big tech companies like Amazon, Apple, Facebook, Google and Walmart, as having made great strides in building digital and physical banking products and services. Acquisitions were in JPMorgan Chase’s future and Dimon said deals could come in payments, asset management, data, and relevant products and services.
More than two years later, a dive into JP Morgan’s acquisition binge reveals an aggressive push to bolster its capabilities in areas like payments, AI and ESG investing. It also reveals one major misstep: the 2021 purchase of millennial founder Charlie Javice’s startup Frank, which JP Morgan Chase is suing alleging she made up fake customers. (Javice, for her part, has claimed that JPMorgan Chase knew what it was buying, but rushed into acquiring Frank because it wanted access to the coveted young student demographic.) Following the Frank debacle, JPMorgan’s dealmaking has attracted the attention of regulators. The Office of the Comptroller of the Currency is scrutinizing JPMorgan Chase’s due diligence of recent acquisitions, the Financial Times reported April 7. The OCC, which supervises national banks, has scheduled a specific audit of JPMorgan Chase’s dealmaking, after the bank acquired dozens of small companies in 2021 and 2022, the story said. JPMorgan and the OCC declined to comment.
