JPMorgan Chase will launch an online-only Chase bank in the U.K. this year.
Johannes Eisele/AFP via Getty Images
JPMorgan Chase has bought the U.K. online wealth manager Nutmeg for an undisclosed sum, fueling an expansion into retail banking outside of the U.S.
The deal for the robo-advisor, which has more than £3.5 billion ($4.9 billion) in assets under management, will complement plans to launch an online retail bank in the U.K. under the Chase name in the coming months.
The U.K. version of Chase intends to offer a range of products, but will first launch with “a new take” on current accounts, the banking giant said. Chase already has 56 million digitally active users in the U.S.
“We are building Chase in the U.K. 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, the chief executive of JPMorgan Chase’s international consumer division.
Launched in 2012, Nutmeg is one of the country’s most popular online wealth managers. With more than 140,000 clients, it is a key rival to the likes of Wealthsimple.
Nutmeg Chief Executive Neil Alexander said that the group “will form the bedrock of the bank’s retail digital wealth management offering internationally over the long term, complementing the launch of Chase as a digital bank in the U.K. later this year.”
Plus:Advertising Regulator Takes Aim at Ads That Misled Consumers Over Risks of Investing in Bitcoin
In November 2020, the two groups joined to launch Smart Alpha, a Nutmeg investment product with asset allocation managed by the U.S. group. Nutmeg also offers a range of products including tax-free savings accounts, called ISAs, as well as pensions and general investment accounts.
Alexander, in a post on Nutmeg’s website, said that its products and services will be unaffected by the deal, which is expected to be completed later in the year following regulatory approval.
Looking ahead. JPMorgan Chase’s deal to buy Nutmeg is notable in two ways.
The investment banking giant’s decision to join with a young, technology-driven, private company underscores a strategy to position itself like a “challenger bank.” The U.K. retail banking scene is a crowded one, with a gang of upstarts such as Revolut and Monzo going head-to-head with the country’s established players— Barclays, Lloyds, HSBC, and NatWest. Instead of branching out on its own—let alone opening physical branches in the U.K.—JPMorgan Chase is looking to mesh right into the U.K.’s fast-moving fintech ecosystem, which is one of the most valuable in the world. More acquisitions may follow. That is the implication for the investment bank.
But the deal also promises to raise the stakes in U.K. banking and fintech more broadly. While Revolut, Monzo, and others ponder the possibility of multibillion dollar initial public offerings, a publicly traded beast is about to enter into their territory. This will also serve as a wake-up call to the U.K.’s established retail banks, which have seen the long-term decline of traffic in physical branches accelerated by the Covid-19 pandemic.
