JPMorgan Chase & Co. has hired a PayPal Inc. veteran to help guide its mobile strategy.
Jack Stephenson began about two weeks ago as JPMorgan Chase's director of mobile, e-commerce and payments.
Stephenson, who was previously PayPal's senior vice president of strategy and new ventures, said that "there are opportunities to reach a much broader audience with mobile" than without it, and that "the leadership here is taking this very seriously."
JPMorgan Chase has close to 3.3 million active mobile banking customers (who have used the service within the prior 30 days) and adds 600,000 each month. It has 28 million online consumers.
JPMorgan Chase has an opportunity to take mobile payments a step further by introducing mobile payments at the point of sale — an area where there has been a lot of attention but not much progress.
Target Corp. and Starbucks Corp., for example, allow users of stored-value cards to access their accounts through a bar code displayed on a cell phone screen, and some companies allow users to make mobile payments by attaching a contactless payment chip to their phones, within stickers or cases. But most people still stick to cash or plastic at the point of sale.
JPMorgan Chase has the scale to change that, Stephenson said.
For example, through its processing unit, Chase Paymentech Solutions LLC, JPMorgan Chase has the merchant relationships it needs to install whatever readers might be needed.
JPMorgan Chase's card business would provide the consumer and business accounts to fund mobile point of sale transactions.
Such a deployment is still far off — JPMorgan Chase has still not decided whether it would follow the Target and Starbucks examples with bar codes, or use Bluetooth or some other wireless communication system, Stephenson said.
Stephenson said that although his experience at PayPal, a unit of eBay Inc., will prove useful in his new role, JPMorgan Chase's customers have different needs.
One of key difference between JPMorgan Chase's approach to mobile and PayPal's: text messages work for banking, even though they did not for payments.
"SMS is going to be a big part of mobile banking," Stephenson said. "People want that, and these are their core financial accounts."
PayPal, by contrast, does not control most users' primary financial accounts, so the demands were different, he said. "PayPal was focused more on payments," so users demanded more full-featured applications to manage the payments they made on a mobile device; they had less need for the simple inquiries that JPMorgan Chase customers handle by text.
Indeed, when PayPal launched a text-based mobile payment system in 2006, it did not get widely used. When it came out with an iPhone app two years later, its mobile payment volume increased considerably, Stephenson said.
JPMorgan Chase will provide those apps for users that need them. It already has one for consumer iPhone users, and Stephenson noted that customers outside of JPMorgan Chase's consumer product lines would probably have more complex needs that justify full-featured apps.
Beth Robertson, the director of payments research for Javelin Strategy and Research, said, "it's good that they've brought on somebody that's got the foresight and the experience to be able to move them more rapidly forward."
She agreed that text messages are well suited for banking. "I don't think text has to be the only or even the primary method for banking, but because people do use their interaction with the bank in a more informational and communication context frequently — not always for transaction purposes — text can be well suited."
Today, JPMorgan Chase's mobile strategy is comparable to its peers, Robertson said. "They are all, I think, in a nascent stage."
