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JPMorgan Chase, the largest U.S. bank in terms of assets, will buy Nutmeg Savings and Investment, a British online bank, for a price said by insiders to be about $1 billion, the Wall Street Journal reported.
Nutmeg, founded in 2012, has 140,000 customers and €3.5 billion, or about $5 billion, under management.
JPMorgan plans to open a retail banking operation in the U.K. called Chase, the company announced in January, and is currently testing related concepts internally.
The Nutmeg purchase will be kept separate from Chase, at least for now, JPMorgan said.
Chase will compete with relative newcomers Starling Bank and Monzo Bank, both online institutions begun with the encouragement of British bank regulators to increase competition in the wake of the Great Recession.
These “challenger banks” have prodded conventional institutions to improve their online presence, the WSJ noted, leaving Chase to scratch a foothold in an already competitive market.
Nutmeg was founded to make banking services more accessible through the Internet, CEO Neil Alexander explained in a statement quoted by the WSJ.
The bank chose the name “nutmeg” because, like the spice, wealth management services were once scarce and expensive but now, thanks in part to the Internet, are affordable and widely available.
Nutmeg has tailored its appeal to customers who lack financial sophistication, avoiding jargon, offering online financial Q&As, and providing tools designed for easy use.
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