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Moneyfarm would lose customer focus if swallowed by finance giant, says CEO

This week saw UBS acquire US digital wealth manager Wealthfront, following JP Morgan's purchase of Nutmeg in the UK last year, but the Moneyfarm CEO says such deals can be detrimental to customers.

a man wearing glasses

Giovanni Daprà/Moneyfarm.

Moneyfarm wants to remain an independent fintech, saying being swallowed by a financial juggernaut would mean it would lose its customer focus.

Moneyfarm CEO and co-founder Giovanni Daprà spoke to AltFi following the announcement of a multifaceted tie-up with investment house M&G.

The deal sees M&G lead a £44.1m investment round in Moneyfarm, acquire a minority stake in Moneyfarm, and use Moneyfarm's digital expertise to launch its own digital investment service.

Moneyfarm is one of the UK's leading lights in digital wealth management, which has seen a boom during Covid as younger investors with time on their hands turned to digital investing and savings.

Amid the growth in the sector has come M&A activity.

Last year, JP Morgan splashed out £700m on robo-adviser Nutmeg, one of Britain's biggest digital wealth managers, while this week UBS agreed to acquire US digital wealth manager Wealthfront for $1.4bn.

Daprà says Moneyfarm, which has over 80,000 clients and over £2.2bn assets under management, is unlikely to go down the same path.

"Never say never," says Daprà.

"But the reality is I do think when you are part of a bigger organisation you tend to focus a bit less on the customers and it becomes more difficult to execute. 

"From my perspective, we are one of the largest I think, if not the largest, independents in the UK, so we want to remain independent.

"That is a very important point for us and we think that by having more than one partner this actually helps that path.

"I think we are at the very beginning of our journey as a company and as a sector, so I wouldn't want to change that if I can."

But Daprà says recent M&A activity in the sector is a win for Moneyfarm and its independent rivals, as it highlights the sector's rude health as well as reinforcing investor interest in digital wealth management.

"Overall we think there is going to be a lot of value for independent players," he says.

The deal struck with M&G comes as part of Moneyfarm's increasing shift towards a partnership model, which sees it offer its digital wealth management as a module for other financial institutions to integrate.

Moneyfarm's platform-as-a-service, which has also already been used by financial outfits including UniCredit in Italy and also in Italy by Poste Italiane, which inked a similar type deal to the M&G one with Moneyfarm.

Currently, partnerships account for around 10 per cent of Moneyfarm's business, but Daprà says the intention is to grow this to at least 30 per cent in the next 24 months.

"We think potentially that is a low bar because there is an increasing opportunity and demand from financial institutions to partner with fintechs to accelerate their digital capabilities," he says.

Daprà says Moneyfarm could be open to similar type multifaceted deals to the one it struck with M&G.

"The short answer would be that we will consider them," he says.

"I think there are other countries (outside of the UK) where we might look at doing a similar structure."

The virtues of such a tie-up, says Daprà, are that, unlike capital from traditional investors, Moneyfarm reaps the benefits of tapping into the brains, expertise and experience of a leading investment house like M&G.

There is also the potential to explore other opportunities with M&G, with the Moneyfarm CEO citing M&G's experience in private markets as an example.

"There is going to be definitely a lot of other opportunities to discuss with them," he adds.

To date, Moneyfarm, which was founded in 2012, has raised a total of £139m.

Its latest funding will be used to expand its investment portfolio; invest in its manpower, and also further build out its partnership model.

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