⚠ A Fixed Physical Cost in a Business Going DigitalModerate threat
JPMorgan Chase (JPM) — threat to the moat
Mobile customers rise every year and the leases do not get cheaper -- a moat that has to be paid for whether or not anyone walks in.
The branch network is a moat that has to be paid for every year whether or not anybody walks in.
Active mobile customers rose 7% in 2025 and again by 6% in the June 2026 quarter1, continuing a decade-long migration. Every year, a larger share of the transactions the network was built for happens on a phone, while the leases, staff and security costs of the network remain.
The competitive asymmetry is uncomfortable. A digital-only competitor serves a customer at a fraction of the marginal cost and does not carry the fixed base at all. If primary-account acquisition ever stops requiring a physical presence — and it is slowly becoming less dependent on one — the network turns from an advantage into a legacy.
What defends it for now is that the migration has been about transactions rather than relationships. Households still overwhelmingly open primary accounts, mortgages and small-business facilities where there is somewhere to go.
Watch new checking accounts per branch, and watch whether digital-only competitors start winning direct-deposit relationships rather than secondary balances. The second would be the signal that the buildings have stopped earning their keep.
- ReportedActive mobile customers rose 6% year on year in the June 2026 quarter.JPMorgan Chase & Co., second-quarter 2026 earnings release (Form 8-K, exhibit 99.1) — net income $21.2bn ($7.70 per share), or $16.9bn ($6.14) excluding significant items; ROE 24%, ROTCE 29% and ROTCE excluding significant items 23%. Reported revenue $57.3bn and managed revenue $58.0bn; expense $27.3bn with a reported overhead ratio of 48%; credit costs $2.5bn with $2.4bn of net charge-offs and a $149M net reserve build. Average loans up 10% year on year and average deposits up 7%. CET1 Standardized 14.1% and Advanced 14.2%, total loss-absorbing capacity $590bn, Standardized RWA $2.1tn, cash and marketable securities $1.5tn; book value per share $133.01 up 9% and tangible book value per share $113.35 up 10%; Basel III CET1 capital $303bn; supplementary leverage ratio 5.5%; net payout over the last twelve months 73%. Segment returns: CCB ROE 34% with client investment assets up 21%, a Card Services net charge-off rate of 3.34%, card sales volume up 10% and active mobile customers up 6%; CIB ROE 22% with investment banking fees up 30% year on year, a #1 ranking for global investment banking fees at 9.3% wallet share year to date, markets revenue up 35% with fixed income up 6% and equity markets up 86%, and average client deposits up 11%; AWM ROE 48% with AUM of $5.1tn, up 18%. Significant items were a $4.6bn net gain related to Visa shares ($1.27 of EPS) and $1.0bn of gains on certain equity investments ($0.29). Jamie Dimon: 'These results were the product of a particularly favorable environment with an elevated level of market activity, as well as rigorous execution, years of consistent investment and thoughtful capital deployment.' — Q2 2026 · publ. 2026-07-14 · source ↗