JP Morgan Chase Introducing Free Stock Trading App
JP Morgan Chase is set to make investing a bit easier for its 47 million online and mobile banking customers. CNBC reports that the bank will soon launch a free stock trading service, while also giving users access to equity research and other portfolio-building tools. Dubbed “You Invest,” the new service is set to debut next week and offer users up to 100 free trades in their first year.
Prior to today’s announcement, the bank had been charging a $24.95 fee per trade on stocks and ETFs. Thus the introduction of free trading is a major change that not only puts pressure on other firms looking to attract new investors but also places the bank in direct competition with FinTech apps like Robinhood. In fact the head of Chase’s You Invest, Jed Laskowitz, seemed to take a shot at such companies, saying, “There are customers out there who may not want to trust their credentials or their money to an app of the month. We’re thinking about what’s right for our customers, helping them get invested, and stay invested and diversified.”
As mentioned, it’s clear that JP Morgan is chasing Millennials and other young investors with their new offering — and early research shows it’s working. During early trials of the You Invest platform, it was discovered that the service’s users were an average of 15 years younger than those utilizing the bank’s traditional investment services. Similarly 90% of users hadn’t previously invested using JP Morgan.
At launch, the You Invest platform will have no minimum balance requirement and customers will be able to transfer funds from their Chase bank accounts to their investment funds. Something to note is that, while the “100 free trades in your first year” offer is being extended to all customers initially, those with Premier-level bank accounts — requiring a total balance of $15,000 — will see this offer renewed in subsequent years. Reportedly the number of free trades a user has left will be easy to find in the app. Meanwhile, should users exceed this number, additional trades will be assessed a $2.95 per-trade fee, which is still relatively low compared to other services.
Chase’s You Invest could be seen as another example of big banks using their size to take on smaller FinTech firms. After all, this strategy appears to be paying off with the P2P app Zelle, although that service is a collaboration between several institutions. However, while Chase may have an advantage in that it will likely take little effort for current customers to start their investment accounts with the bank, Robinhood has its own appeal, such as the addition of cryptocurrency investing. Additionally, unlike Chase’s offer that will expire after the first year for lower-level customers, Robinhood’s platform has no such restrictions. In the end, this is still a bold move from JP Morgan that will likely bring more investors to the market — and potentially spur more FinTech innovation in the way of roboadvisors and other such services.