Dimon has been at the helm of JPMorgan Chase for more than 12 years. At 62, boyish and sometimes blunt, he remains true to his roots as a straight-talking guy from Queens (albeit one who has an MBA from Harvard Business School, runs the biggest bank in the United States, and is a billionaire).

The public’s view of Wall Street is still pretty negative. Do you see it as part of your role to try to improve that?

Dimon: It’s hard to change that perception, because banks are different from normal businesses. If you walk into Walmart and have cash, they’ll sell you something. But banks have to turn people down. We won’t make the loan. Or we’ll give you the loan but tell you that to meet your covenants, you need to practically sell your firstborn. Everyone has a horror story. We just have to do our job, serve our clients well, and let that be our reputation.

Does this negativity carry a cost?

Yes, it matters. Part of that negative perception was well earned during the financial crisis. Not all banks were responsible for the failures and for the downturn in the economy, but we all got painted with the same brush: “They’re all fat cats. They all got bailed out.” It will take a generation for the industry to rebuild its reputation.

A far greater concentration of assets is now in just a few U.S. banks’ hands. Is that OK?

Yes, I think it is. People have to be rational about this. The banking industry is far less concentrated in the United States than in many other countries: Japan, France, the UK. If you’re global and diversified, you have to be large. It’s hard to compete if you don’t have economies of scale.

Does that mean “too big to fail” is a meaningless concept?

You don’t want banks that are too big to fail—if the result of failure is that the people have to pay for it or the economy goes down. But a company should be allowed to fail in a way that is safe for the economy and that doesn’t require taxpayers to pay the price.

Have the laws enacted since the financial crisis helped with that risk?

The new capital-equity regulations are good. Today Lehman Brothers [which collapsed during the 2008 crisis] would be required to have three times as much equity and four times as much liquidity—and if it were in trouble, it probably wouldn’t fail. If a bank does fail, regulators now have a mechanism for unwinding things in an orderly way. Plus, any money lost will be charged back to the banks, not to the American people.

Are you happy in general with the amount of regulation in place these days?

Just to be clear, no big bank wants to throw out Dodd-Frank and rewrite everything. And some of the regulations are actually good: stress-testing, living wills, capital-liquidity requirements, transparency. But other aspects were overdone and not coordinated. If we can change those things—through calibration and eliminating duplication—we’ll have a safer system that’s in a better position to finance growth.

What do you consider to be your chief competitive threat?

The biggest potential disruption to our business is new forms of payment. You have PayPal, Venmo, Alipay, and more. These companies are doing a good job of embedding basic banking services in their chats, their social, their shopping experience.

Do you view Chinese banks as a threat?

I think Chinese banks could be big competitors. They’re supported by their government. They make more money than we do. They have a huge home market, which is a competitive advantage. And they adopt a strategy of following their own companies overseas to handle basic banking services and then moving upscale to more-sophisticated services. They’re coming. They’re ambitious.

What’s your view on cryptocurrency? A few months ago you said you thought bitcoin was a fraud and that you’d fire any trader dealing in it.

I probably shouldn’t say any more about cryptocurrency. But it’s not the same as gold or fiat currencies. Those are supported by law, police, courts. They’re not replicable, and there are strictures on them. Blockchain, on the other hand, is real. We’re testing it and will use it for a whole lot of things.

Many of your fellow CEOs complain that short-term pressure prevents them from doing things for the long-term good of the company. Do you feel that?

We invest a considerable amount in projects that have a long-term payoff. Some of them are table stakes for a business—investments in training, in branches, in technology. You can’t stop-start them. They’re not done in a single year. There’s no magic to 12 months.

Source: Harvard Business Review; by Adi Ignatius.

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