As JP Morgan prepares to launch a digital bank in the UK later this year, it has acquired robo-adviser Nutmeg, which has 140,000 investors and £3.5 billion in assets under management.
The most obvious benefit of the purchase is access to an existing UK customer base. Building one from scratch would require extensive marketing and/or a market-beating offer (which is how Goldman Sachs’s Marcus quickly built a UK customer base).
JP Morgan is innovative in its cross-selling of products – for example, customers of its Chase retail bank in the US who move money to a Robin Hood investment account receive a digital promotion to open an account with JP Morgan’s own You Invest. The firm will also be able to tap into the robo-advisor’s expertise in the digital realm, both in user experience design and in Nutmeg’s growing use of customer data.
JP Morgan has also bought the Nutmeg brand. While the press release says Nutmeg’s products will be unaffected, although it’s unclear at this point whether Nutmeg products will continue to be sold as such or brought under the Chase umbrella when it launches.
Either way, there is scope for both sides to benefit in brand terms, with JP Morgan gaining a UK native name and Nutmeg gaining the halo effect of an established name in financial services.