(Newswire.net — January 23, 2020) — JP Morgan has been one of the few distinguished, world-famous banks trying to step away from its traditional business and get involved with something different for a change. As the trend of investing in new markets is becoming more mainstream, banks like JP Morgan, Goldman Sachs and CitiBank are trying to get their fair share of the industry. Creating funds to help out the emerging industries, or businesses with minority leads or women who want to fund their innovative ideas isn’t something that is just emerging. It has been a distinguished trend for the past year that has actually brought about a lot of change and a lot of priceless opportunities for those groups who don’t have access to the necessary tools to implement their innovative ideas.
Recently we’ve seen the power of the less conventional industries and how they can also be a viable option for a profitable business. In many emerging economies the source of income can be quite unconventional, this is why many of these countries focus on We’ve seen the rise of the live forex market trading, or innovation to see the profit. We’ve also seen the rise of fintechs in unlikely places and almost all businesses incorporating them as a part of their day to day management. Now we are seeing the big and powerful entities, like JP Morgan, invest in the emerging markets, which fintechs are also a part of.
Banks are trying to secure their place in these innovative and less conventional industries because it’s the fintechs and the startups that are increasingly getting the new customers and offering improved, cheaper service compared to the more traditional institutions.
JP Morgan, just like any other bank that has a realistic long-term strategy sees the necessity of investing in these industries which is why the bank just launched a $100 billion fund that will help out multiple startups to get their start and become profitable.
The fund’s purpose
J.P Morgan Chase announced the launch of the Development Finance Institution that aims to boost private investment in emerging development projects. The bank is offering to pay $100 billion every year to projects that will fit the banks’ vision for these emerging markets and it is even proposing the introduction of a formal methodology that will define projects that fit both commercial and development targets of the bank. To do this right, the bank hired outstanding industry professionals like Faheen Allibhoy who has been in the World Bank-affiliated International Finance Corporation for the last 18 years and she will be the one leading this Institution according to her vision and experience. Allibhoy wants to explore the less developed economies that are just learning to stand on their feet and require a large investment in order to generate even larger income because their economies are quite large. The newly-appointed head of the Development Finance Institution named countries like Indonesia, Turkey, Mexico and Egypt as their target countries but the emerging industries will also get their fair share even if the innovation is not coming to form the aforementioned countries. JP Morgan wants its investment to be more mission-driven while not neglecting the profitable aspect of it, which is why the emerging markets are their focus.
Why emerging economies?
As we’ve seen in the past year, most of the innovative ideas no longer come from the developed world. Where the need for improvement is stronger, the willingness and determination of those wanting to better their environments are stronger as well. Investing in emerging markets and industries is a smart move on the bank’s part and will likely turn out to be the move that not only further improves it reputation as a bank that is focused on impact investing but also as a bank that is in tune with the market and what it needs to expand and get the best out of its possibilities.
The Fund has ambitious goals to boost economic growth and the quality of life in these emerging economies and it will probably be a big topic at the upcoming World Economic Forum set to take place Davos. The talks about impact investing are becoming more and more common with big banks and companies taking more responsibility for doing the good for other countries and helping them develop as well. The pressure has been coming from the customers themselves who want to engage with companies whose values they can get behind. The funding can include funding for infrastructure but also for the sub-emerging industry of microfinance lending to entrepreneurs or regular people which has been taking over the whole world. The technology that takes the money transaction out of the bank’s grip and allows for people with bad credit scores or no access to the banks to engage in financial services and to benefit for the first time in their lives from the easy and cheap services that deliver their money and receive it safely as well.
Future of impact investing
The biggest bank of America is taking its assets and putting them to the mutual good, which is an inspiring move on JP Morgan’s part. We’ll have to see just how successful and impactful the fund will turn out to be but at least we know for sure that the funding will change the lives of many people in the developing countries who have the potential to be useful, but can often struggle to finance their ideas.
This trend of providing opportunities for those who normally don’t get the chance to express and execute their ideas is a widespread phenomenon. Some banks chose to focus on different, emerging economies while others will choose the amino group and finance their ideas, which is the case for another major American bank, Citibank.
This trend will hopefully be an example for other major banks to follow as well, but even if JP Morgan, along with CitiBank and Goldman Sachs take their mission of contributing to the general good seriously enough follow through with her intentions it could really change the dynamics within and between these countries.
JP Morgan is counting on the portable investment that generally makes more sense in the countries where they need for them is stronger even if the economies are not at their prime right now. This is why their strategy that is aligned to their values has a chance of making an actual impact.