With its payment platform for landlords and tenants, JPMorgan Chase wants to change the way rent checks are written.
JPMorgan Chase is betting that landlords and tenants are finally ready to give up paper checks and switch to digital payments.
Sam Yen, the chief innovation officer of JPMorgan’s commercial banking division, said that the bank is testing out a platform it made for property owners and managers that automates the billing and receipt of online rent payments. This platform is for property owners and managers.
Digital payments have been taking over more and more of the world’s transactions, thanks in part to the COVID pandemic. However, the monthly rent check is one area where paper is still king. This is because the market is very fragmented. Most of the 12 million property owners in the U.S. have fewer than 100 units in their portfolios.
JPMorgan says that because of this, about 78% of people are still paid with checks and money orders. The bank said that more than 100 million Americans pay more than $500 billion in rent every year.
“Checks are still the most common way to pay rent,” Yen said in a recent interview. “People who live there still say, ‘The only reason I still have a chequebook is to pay my rent,’ if you talk to them.” So there are lots of chances to save money and time there.
Excel and Quicken
JPMorgan has spent the last few years making Story, a piece of software that is meant to be an all-in-one solution for property management.
Kurt Stuart, who runs JPMorgan’s commercial term lending for the Northeast region, said that collecting rent is the “most time-consuming process that exists today for a real estate owner-operator.” So, the bank’s first goal was to make that process easier.
Yen said that landlords usually use decades-old software like Microsoft’s Excel and Intuit’s QuickBooks to run their businesses. This is because they have to manually collect and deposit paper checks. In the past few years, new options like Buildium and TurboTenant have come out that are better suited to the real estate business. The executive says that none of them are in charge yet.
Yen said that Story will “give [property owners and managers] much more visibility across their entire portfolio to see exactly what’s been paid and what hasn’t been paid.”
Yen says that JPMorgan hopes to get more users by giving them useful information through data and analytics, such as how to set rent prices, where to invest in the future, and even how to find good tenants.
With $95.2 billion in loans to multifamily property owners at the middle of the year, the bank says it is the top lender in the country, but it wants to help more than its 33,000 clients in the sector.
Yen said that landlords and renters don’t have to be JPMorgan customers to use the platform when it becomes more widely available next year. He said that the bank hasn’t decided how much it will charge for the product yet.
Residents can use an online dashboard to set up automatic rent payments, get reminders, see their payment history, and see what their lease says. Yen said that this is better than mailing a paper check because it gives people peace of mind.
Digital push
It’s part of JPMorgan’s larger plan to create digital experiences, fight off competition from fintech companies, and strengthen relationships with clients. The bank’s CEO, Jamie Dimon, has said that the bank will spend more than $12 billion a year on technology. This is a huge amount, and bank analysts have asked for more information about investments this year.
Doug Petno, CEO of JPMorgan’s commercial banking division, told analysts in May that the bank wants to do more than just lend money to property owners. Eventually, it wants to use its software to get “a significant portion” of the $500 billion in annual rent payments.
Petno said, “We’ve been putting money into building comprehensive payment and rent solutions for our multifamily clients.” “By doing this, we hope to give our business a chance to make a lot of money in a new way.”
