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JP Morgan Buys Robo-Adviser and Digital Wealth Management Company Nutmeg in the UK Retail Push

Source: Official website

Multinational financial giant JP Morgan Chase has acquired digital wealth manager Nutmeg Saving and Investment Ltd. as part of its expansion plans to establish a retail banking presence in the UK. With the new acquisition, the US bank is looking to compete with established British retail banking rivals such as the Goldman Sachs (GS.N) consumer brand and a thriving group of fintech companies with intents to become a full-service retail bank under its Chase brand.

Established in 2012, Nutmeg is one of Britain’s leading financial technology companies and Robo-advisers, offering lower-cost automated financial planning services. The digital wealth management company offers ready-made risk-targeted investment portfolios that can be accessed via ISA, Lifetime ISAs, Junior ISAs pensions, and general investment accounts. With more than 140,000 customers and £3.5 billion in assets, the equivalent of $5 billion, Nutmeg is one of Britain’s fastest-growing financial companies with 70 percent growth in a year. However, Nutmeg is yet to profit, making a pretax loss of £22 million in 2019.

According to a source, Nutmeg was valued at close to £700 million ($972.79 million). JPMorgan Chase confirmed the transaction and acquisition, and the American bank reiterated that it would complement Nutmeg’s digital bank launch under its Chase brand later this year.

“We are building JP Morgan Chase in the UK from scratch, putting the customer’s experience at the heart of our offering using the latest technology, principles that Nutmeg shares with us,” said Sanoke Viswanathan, CEO of the international consumer JPMorgan Chase.

CEO of Nutmeg, Neil Alexander, also assured its consumers the same level of transparency, convenience and service that is the core value of the UK digital wealth manager.

“I am truly impressed with the digital experience that Chase is building for the UK, and this new phase in our story will see Nutmeg’s customers benefit from a wider range of services and products in the future and allow us to expand into new markets,” he said.

The UK digital move was planned for more than two years as the central part of a closely guarded project. The biggest bank on the planet in terms of assets, JP Morgan Chase, gets almost 50 percent of its revenue from a consumer business operated only in the US. The bank offers a range of products to more than 56 million digital customers. To kickstart its plans, the New York-based JPMorgan had already launched a product partnership with Nutmeg in November, a new line of portfolios combining active and passively managed exchange-traded funds (ETFs). 

The Nutmeg deal follows plans by rival US bank Goldman Sachs Group Inc to shift the focus of its Marcus consumer division in Britain towards wealth and investments. In a statement,  Goldman Sachs Group said it intended to offer a Robo-adviser to Marcus clients in the country.

Experts in the banking industry said the new acquisition will give JPMorgan an initial user base in Britain and a short leg in the UK marketplace, where it does not yet have a consumer presence.


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