January 25, 2021

Former JP Morgan execs launch wealthtech Vestrata with $4m

Six former JP Morgan executives have co-founded Vestrata, a wealthtech which raised a $4 million investment round this week.

Led by Mark Le Lievre, former global product head at JP Morgan’s private bank, Vestrata also houses Tim Riseborough – HSBC’s former commercial banking chief operating officer. Sarah Newman, ex-investment product head at Barclays’ wealth management arm is the firm’s chief commercial officer.

Vestrata

Vestrata has already signed up a number of investment managers and solution partners

The newly formed start-up raised the fresh capital from its co-founders, employees, family, and friends. Come 2021, it plans to raise more money from venture capital investors.

All about engagement

“We are entering an era where wealth managers will no longer be able to rely on market appreciation to drive revenue growth,” says Le Lievre.

The fintech hopes to fuel a “fundamental transformation” in the wealthtech industry, based on differentiated products which “engage their [private banks’] entire book of business”.

Its modular platform, designed to drive client engagement for wealth managers, consists of investment products, advice, portfolio analytics and risk management services.

Investment managers and partners

According to its website, Vestrata has already signed up a number of investment managers and solution partners.

These include London-headquartered asset manager Unigestion, Pennsylvania-based investment banking firm Federated Hermes, New York-based asset management firm AllianceBernstein.

iCapital Networks, an alternatives investment platform, will provide Vestrata’s alternatives. Alongside K2 Advisors, the hedge fund boutique owned by Franklin Templeton.

Other partners include Florida’s biometric security specialist Fortress Identity, Italian investment consultancy Prometeia, and Nanobi, a Bangalore-based data analytics provider.

Disruption long overdue

“Revenue growth for private banks in Europe has been very slow over the past decade. But this has been disguised by rising markets,” Le Lievre tells the FT.

“The reality for most private banks is that 20% of the clients are responsible for 80% of their business. But that also means 80% of the client book is underserviced.”

According to PwC research by Swiss strategy director, Holger Ackermann, private banks have struggled over the years for a number of reasons.

These include “pressure from low interest rates”, “stricter regulation” which has eliminated whole revenue streams, “a drive for greater price transparency”, and a changing portfolio composition with “more assets falling into higher wealth buckets” – which equals lower revenue margins.

A McKinsey Western Europe report in 2018 said “banks need to assert greater control over their profit growth”. It cites raising revenue margins and controlling costs as the solutions.

These seem to be Vestrata’s two focuses. Driving revenue margins with more differentiated products, and keeping costs down.

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