Chase profit booms, mobile user growth erodes

The biggest US bank by assets reported its Q1 2021 earnings, revealing that profit jumped 18.2% to $14.3 billion, up from $12.1 billion in Q4 2020. The growth was driven in part by a $5.2 billion release of funds from its loan loss reserves, in light of recent economic data that has been consistently positive, Chase CFO Jennifer Piepszak said in an earnings call. The reserve release created a $4.2 billion boost for Chase after a total of $1.1 billion in charge-offs.

Chase also reported 9% year-over-year (YoY) growth in total active mobile banking users in Q4, continuing a steady decline in this growth rate over the past few quarters. While the health concerns brought on by the coronavirus pandemic set the stage for a spike in first-time mobile banking users as consumers stayed home and branches closed, Chase’s user growth has remained flat or ticked down in the past year. This suggests the bank is sliding toward a saturation point where all clients who are willing to try mobile banking will have done so and any mobile customer growth will be limited to new customers.

The next stage for Chase as mobile user growth levels out will be to deepen engagement, which it could do by rolling out in-demand mobile banking features it doesn’t offer yet. Insider Intelligence’s 2020 US Mobile Banking Competitive Edge Study reveals mobile banking tools that Chase currently lacks, which it could introduce to more fully meet customer needs with its app:

  • The ability to cancel subscriptions from within the Chase app. This feature is both in high demand and exceedingly rare. It was the most valued digital money management feature in the study—deemed “extremely valuable” by 35% of respondents—but not one of the top 25 US banks by assets offers it, meaning Chase could get a major leg up on its competition by rolling it out.
  • The ability to chat with a human agent in-app. This feature was the most in-demand customer service feature in the study, with 38% of respondents calling it “extremely valuable.” And while Chase doesn’t offer it currently, it’s coming close, debuting an in-app virtual assistant in late 2020. Enabling this virtual assistant to pass client chats that it can’t handle off to a human agent could help drive usage.