American banks are facing extensive competition from Silicon Valley, both in the form of fintechs and Big Tech companies (Amazon, Apple, Facebook, Google and now Walmart).

This is one of the threats JPMorgan’s CEO Jamie Dimon tells in the message to shareholders in the framework of the annual report, Frank Media reports.

Competition with tech companies has led to a situation where American and European banks are playing an increasingly smaller role in the financial system. Products like payments, deposits and lending – including mortgage and consumer loans – are moving out of the banking system to neobanks, Dimon says.


 
He notes that it is also due to banks’ competitors advantages technology-wise. “Many of these new competitors have done a terrific job in easing customers’ pain points and making digital platforms extremely simple to use,” underlines Dimon.

He points out fintech companies’ ability to merge social media, use data smartly and integrate with other platforms rapidly. It will “help these companies win significant market share”, Dimon thinks.
He considers cloud technologies to be an important advantage of neobanks. With them, fintech companies get access to data with practically “unlimited compute power”.



Dimon believes the banks’ advantages are the brand power and the ability to save money on operations’ scales and get feedback from clients. The disadvantages are inflexible outdated systems that need to be transformed through cloud technologies.

Potential regulatory differences for banks and fintech companies create risks for clients, says Jamie Dimon, urging for equal rules of the game for the financial market. “Growth in shadow banking has also partially been made possible because rules and regulations imposed upon banks are not necessarily imposed upon nonbanks,” notes Dimon.

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