Chase has announced an online venture providing online aggregation services to wealthy customers.
Chase Manhattan will commit both money and private-banking customers to its online venture with provider Kinexus, which will let high net worth investors find out their exact wealth on a daily basis. Kinexus’ aggregation service enables wealthy people to monitor a variety of investments daily and use statistical models to measure risk, diminishing the current complexity in managing overall wealth.
Adding this functionality to wealthy customers’ online services is merely a rational step for Chase, in keeping with services from rivals such as Merrill Lynch, Goldman Sachs and Citigroup. And since Chase’s erstwhile merger partner JP Morgan was the first to offer personal risk management services online last year, the move makes additional tactical sense. However, Chase’s venture does have an element that should cause wider ripples within the online investment management community.
The target customer group for the new services is investors with assets of $3-5 million. Investors with this kind of asset base hardly represent the ultra-wealthy, since they account for some 350,000 households in the US alone. Access to this group is already hotly contested, by traditional wealth management and private banking providers such as Goldman Sachs and JP Morgan. Critically, brokerages such as Charles Schwab also want their share. They have grown their services online and now want to move up the product chain, boosting average customer portfolio value.
This competitive pressure illustrates the capacity of the Internet to open up new customer opportunities. Experienced online brokerages can capitalize upon their brand and experience to target wealthier customers’ wider needs from a technology base. Their rivals are the traditional private banks, wielding existing customer contact. Chase will benefit from having elements of both, with its blend of technology and scale. But its competitors will respond rapidly. The battle for wealthy customer servicing will soon start to create casualties.
