JPMorgan Chase beefs up mobile app with bond trading as bank targets $1 trillion in assets

JPMorgan Chase is launching new tools within its mobile app to allow investors to research and purchase bonds and brokered CDs, aiming to attract more active traders and boost its relatively small self-directed investing platform, which currently manages just over $100 billion in assets. The move, part of a broader effort to catch up with online brokerage giants like Charles Schwab and Fidelity, includes offering customized screens and yield comparisons, with the ultimate goal of reaching $1 trillion in assets under management in its self-directed business.

Analysis

JPMorgan Chase is strategically enhancing its self-directed investment platform by introducing new tools for researching and purchasing bonds and brokered CDs via its mobile app and web portal. This initiative aims to make fixed income investing simpler, mirroring the ease of stock and ETF trading, and targets more engaged investors who trade several times a month. Despite being the largest U.S. bank by assets, JPMorgan's online brokerage, recently surpassing $100 billion in assets under management (AUM), significantly trails established players like Charles Schwab and Fidelity. The bank has acknowledged its past shortcomings in this segment, with CEO Jamie Dimon previously stating the product was not yet 'very good' in 2021 when it managed about $55 billion. Under the leadership of Paul Vienick, hired in October 2021 from TD Ameritrade, the platform, rebranded from 'You Invest' to 'Self-Directed Investing', is undergoing an overhaul. JPMorgan aims to leverage its extensive existing client base – banking half of the U.S.'s 19 million affluent households but holding only a 10% share of their investment assets – and its recent acquisition of First Republic to bolster its wealth management offerings. Future enhancements include after-hours stock trading, with an ambitious long-term goal of growing the self-directed business to $1 trillion in AUM, driven by customer demand and the bank's inherent advantages such as its branch network and brand reputation. This move reflects a broader industry trend where robust online tools are becoming essential, even for clients who primarily use human financial advisors, as approximately half of such clients also engage in self-directed online investing.

Key Decisions for Investors

• Investors in JPMorgan Chase (JPM) should monitor AUM growth in its self-directed platform and the client conversion rate from its existing banking and credit card customer base, as success in this area could unlock significant value and diversify revenue streams, though competition from established online brokers remains a considerable hurdle.
• Consider that JPMorgan's aggressive push into self-directed investing, particularly with enhanced fixed income and upcoming after-hours trading capabilities, could intensify competition for market share and potentially pressure fees for existing online brokerage firms like Charles Schwab (SCHW).
• Evaluate the execution risk associated with JPMorgan's $1 trillion AUM target for its self-directed business, given its current AUM of $100 billion and past challenges in this segment, while acknowledging the potential upside if the bank effectively leverages its brand, vast customer network, and integrated financial ecosystem.