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September 21, 2016

JP Morgan Chase buys into fintech for wealth management digitisation

Collaboration is becoming increasingly common between banks and fintechs.

By James Nunns

JP Morgan Chase has provided another example of financial organisations collaborating with fintech companies in order to boost their own capabilities.

In order to boost its digital capabilities for individual investors the bank is buying a stake in a Californian fintech called InvestCloud.

As part of the deal the fintech’s technology will be used to offer JP Morgan and Chase wealth management clients online account opening, web dashboards, and mobile apps. Features will be developed over time with the goal of personalising the integration for clients.

Mary Callahan Erdoes, CEO, asset management, JPMorgan Chase, said: “We have been managing wealth for more than 200 years. Pairing these new technological capabilities with our trusted guidance will help our clients achieve their long-term financial goals with flexibility in how they interact with us and our advisors.”

InvestCloud provides software that is designed to make online transactions easier. The company is said to have 660 institutions using its tools which help to support $1.5 trillion assets.

Fintech company InvestCloud offers financial applets.

Fintech company InvestCloud offers financial applets.

The cloud company says that it designs cloud ‘applets’ for a number of different areas such as client communication, client management, portfolio management, and more. The company’s platform uses configurable modules, viewed as a single dashboard, and integrates both internal and financial systems.

In 2015 it secured $45 million growth equity investment, in a round led by FTV Capital.

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The move for JP Morgan is part of a three year plan to spend $300 million on improving its digital capabilities in asset management.

The bank has also signed deals with OnDeck, Virtu Financial, and TrueCar. This is unlikely to be the last deal that the bank signs with Kelli Keough, JPMorgan’s global head of digital wealth management, saying in an interview with Reuters that it was exploring options with a range of vendors.

A growing number of financial services are choosing to collaborate with fintechs in order to boost their own capabilities by taking advantage of the nimbler, and often more innovative, technology drive start-ups.

Reports from the likes of Accenture have highlighted an increasing amount of collaboration, rather than seeking the acquisition route, or to simply try and ignore the threat.

Financial details were not revealed.

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