" class="no-js "lang="en-US"> Banks And Fintechs Are Battling For Your Cash — And It Could Be Life Or Death For Startups - Fintech Finance
Tuesday, May 21, 2024

Banks And Fintechs Are Battling For Your Cash — And It Could Be Life Or Death For Startups

Banks and fintech startups are going on an advertising blitz in the UK right now as part of a land grab among online investment platforms.

I counted no fewer than four adverts for online investment platforms during my morning commute in London this week, while adverts for similar services have been popping up on Instagram and Facebook.

Nutmeg, one of the earliest of the so-called “robo advisor” startups in the UK, is advertising its investment offering all over the London tube. Barclays and UBS are advertising their new digital products. And the recently launched Wealthsimple, a Canadian online investment startup, is advertising on the TV. These are just a few examples.

Simon Miller, the cofounder and UK CEO of digital investment startup Scalable Capital, told me this week that the trend is notable to those within the industry too. Something is happening.

Robo advice” has been one of the hottest trends in UK financial technology for the last 18 months. The term is broad but generally covers automated or semi-automated online investment and financial advice services that charger lower fees than traditional, human-heavy services.

UK entrepreneurs and banking incumbents alike had their heads turned in recent years by the success of early US pioneers in the space such as Betterment — $10 billion under management — and Wealthfront — over $8 billion under management. British takes have sprung up: Nutmeg, Scalable Capital, Moneyfarm, Wealthify, to name just a few.

Now, there’s a land grab going on in the UK. Why?

One reason is that the big incumbents are ready to push their products. Startups led the way in “robo advice” but big banks, spotting that their cash cows were at risk, have been quick to catch up. UBS first launched SmartWealth in late 2016 and said at the end of 2017 it was ready to go big with the product. Barclays relaunched its stockbroking platform as “Smart Investor” last August and, after some initial teething problems, appears to be ready to push the product more widely.

But there’s a more anodyne reason for the advertising blitz too — the upcoming ISA deadline. Miller pointed out that the deadline people to get their tax-efficient investments sorted for the year is April 5, meaning theirs a bunfight to win a chunk of the stocks and shares ISA cash pile that’s potentially up for grabs.

Shane Williams, co-head of UBS’ SmartWealth, said in an email on Thursday: “This is the time of year where most investment decisions are taken. First and foremost, will they invest at all. Over the last five years, a lot of people have chosen not to invest, keeping their savings in low returning cash accounts.

For the startups, this could be a battle for survival. Most charge fees below 1% of assets under management and will likely need to attract billions in order to turn a profit. If the poster campaign pulls in plenty of fresh cash, the many thousands they spent on them will seem like a small price to pay.

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