JPMorgan Chase has acquired the British digital wealth manager Nutmeg in what is seen as a push to enter the UK retail banking and wealth management market.
The US bank is looking to follow its rival Goldman Sachs which made its entry into the UK banking market with the consumer brand Marcus which was launched in 2018. Goldman has been looking to shift its focus to wealth and investments through Marcus in the UK and offer Robo-advisor services as well next year. It would be interesting to see how these two US banks fight out for the market in the UK.
“We are building Chase in the UK from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us,” said Sanoke Viswanathan, CEO of the international consumer at JPMorgan Chase.
Though Nutmeg was started in 2012, it has managed to acquire only around 140,00 clients so far. But as we enter the digital age and automation of financial services is gaining traction, Nutmeg’s suite of automated advisory and financial products might just come in handy for JPMorgan. Though the current clientele of Nutmeg is small, it helps the bank to gain a foothold in the UK banking industry which it would then hope to piggyback on and push ahead.
Nutmeg is yet to turn into profit and as per its full accounts in 2019, it made a pretax loss of around 22 million pounds. Though the details of the acquisition have not been revealed, Reuters reports that the deal could be valued at around 700 million pounds.
“I don’t think this is a major spend and it gives them a quick leg up in the marketplace in the UK,” said Chris Skinner, CEO of financial technology research firm The Finanser.
It all now comes down to how JPMorgan is going to execute its UK strategy. It is clear that the bank is looking towards wealth management as one of the key products for the UK market and with digital banking poised for huge growth in the coming years, it is important for the bank to realise the change in dynamics in the industry and continue the push towards automation and digitalisation with its range of products.
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