US banking giant JP Morgan made a surprising move by announcing the acquisition of Nutmeg, subject to regulatory approval, for an undisclosed sum.
Nutmeg was one of the first investment platforms in the UK to embrace so-called Robo-advice, and it has amassed more than 130,000 clients and is currently managing around £3.50 billion in assets.
In a December 2020 report, the FCA found the UK Robo-advice assets had grown by 700% in just three years
In April Nutmeg confirmed that it had seen revenue growth of +66% and that net inflows in Q1 2021 had increased by +230%, though the business has yet to make a profit
Impressive as those numbers are they are small beer to an organisation that counts its own customer base in the tens of millions, so what exactly does JPM want with investment platform Nutmeg?
Well, Sanoke Viswanathan, CEO of international consumer at JPMorgan Chase provided an insight into the deal by saying that:
“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. We look forward to positioning their award-winning products alongside our own, and continuing to support their innovative work in retail wealth management.”
Nutmeg will be positioned within JP Morgans UK digital bank that is scheduled for launch later this year, under the JP Morgan Chase banner
Nutmeg had already partnered with JP Morgan Asset Management in November to launch a range of Smart Alpha ETFs and a closer alliance was always possible thereafter.
JP Morgan is not the first US bank to enter the UK consumer market, Goldman Sachs launched its Marcus online bank here in 2018 and effectively had to shut the doors such was the demand for accounts with the new bank.
Marcus has accumulated around £21.0 billion in deposits since it opened for business
Only last month Goldman’s announced that it would begin to offer Robo-advice to customers in the UK through a new service expected to launch in 2022. That news may well have encouraged JP Morgan to buy Nutmeg and potentially get a head start on its rival.
Nutmegs CEO Neil Alexander said of the deal:
“Nutmeg’s customers can expect the same level of transparency, convenience and service that helped make us a leading digital wealth manager in the UK”
“I am truly impressed with the digital experience that Chase is building for the UK, and this new chapter in our story will see Nutmeg’s customers benefit from a wider range of products and services in the future, and allow us to expand into new markets”
The news of the Nutmeg deal may prompt a further round of consolidation among wealth management platforms. Simply because achieving scale or critical is so important to these businesses whilst large more established organisations can gain advantages by buying into proven brands and technology rather than typing to build them from scratch in-house.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis