JPMorgan starts to spend $12 billion war chest with Viva Wallet stake

In a recent earnings call, JPMorgan Chase, the largest lender on Wall Street with $3.76 trillion (in assets), announced it plans to increase its annual technology budget to $12 billion, 26% more than it spent in 2020.

As it reported record profits last year, JPMorgan stunned analysts with a forecast that expenses would increase by 8% this year to around $77 billion, meaning it would probably miss a key profitability target in 2022, and possibly in 2023.

JPMorgan said it planned to increase new investments this year by $3.5 billion, or 30 per cent, to almost $15 billion. Technology spending in 2022 will hit $12 billion in 2022, it said.

“The global technology spend at around $12 billion, that’s an astonishing number,” said James Shanahan, an analyst with Edward Jones. “That probably blows away the cumulative dollar value of

The big spending reflects the pressure on banks to compete with financial technology companies like payments processor Stripe, instalment lender Affirm and challenger bank Chime (amongst many, many others).

Jeremy Barnum, JPMorgan’s chief financial officer, said the bank was in a “moment of acceleration” of investment spending. “Part of the reason for that is the amount of competition out there in the market,” Barnum said in a call with reporters, “especially from novel entrants”.

Today, novel or not, the bank announced it has begun to spend the war chest as it entered into an agreement with Viva Wallet, a European cloud-based payments FinTech company, and its existing shareholders to acquire an ownership stake of approximately 49%, subject to regulatory approvals.

Viva Wallet, which operates in 23 countries across Europe, provides card acceptance services through its POS application, add-on Google play devices and advanced payment systems in online stores.

“We are very excited to make a strategic investment in Viva Wallet to support their vision to empower new growth and payments innovation targeted at European small and midsize businesses,” JPMorgan’s head of global payments Takis Georgakopoulos said in a statement.

He said the European payments sector is large in terms of opportunity, with more than 17 million merchants ready to implement payments systems that can be quickly ramped up.

The stake will be acquired from Viva Wallet’s minority shareholders, including the Latsis family office, which holds about 13% of the firm, and British fund Hedosophia, with about 24%.

In 2020 Viva Wallet bought Greece’s first digital challenger Praxia Bank, which was owned by former Barclays boss Bob Diamond and fellow Atlas Merchant Capital partner David Schamis, acquiring a banking licence.

In the same year it launched Apple Pay and Google Pay in 18 countries, offering clients digital business debit cards.

Financial terms of the transaction were not disclosed, but sources close to the deal say Viva Wallet was valued at more than $2.0 billion.

JPMorgan’s investment will top $1.15 billion, including a capital increase in Viva Wallet which will not dilute its founders’ majority stake of 51.5%, said the source.