- JPMorgan acquired OpenInvest in 2021 to meet client demand for sustainable investing.
- One new feature allows clients to see the environmental or social impact of their portfolios.
- OpenInvest cofounders say more tools for clients and financial advisors will launch in 2023.
OpenInvest, a sustainable-investing robo-advisor, has spent the past 13 months integrating into JPMorgan following the bank’s acquisition of the startup in August 2021. Now the fruits of that labor are ready to be delivered.
The startup’s cofounders came up for air to tell Insider what features are coming to JPMorgan’s asset and wealth management business, a group that has $2.7 trillion globally in assets under management and includes its private bank.
JPMorgan nabbed OpenInvest to meet a growing demand for sustainable investing among clients and stick to a promise made in a 2020 report to help clients invest $2.5 trillion towards climate change solutions over the course of nine years, starting in 2021.
OpenInvest CEO and cofounder Conor Murray said the fintech plans to push out values-integrated financial products in 2023 to various channels in the bank’s asset and wealth management business. Such products would include ESG and values-aligned investment strategies for JPMorgan financial advisors, along with proxy voting and philanthropic giving. The fintech is also considering tools that could be used directly by clients, according to a spokesperson.
The fintech has already launched impact reporting on funds, which offer clients more transparency into their investments. Josh Levin, OpenInvest cofounder and chief strategy officer, told Insider clients are able to view things like how much carbon or tobacco the client has avoided funding.
Many of the new features won’t hit JPMorgan’s marketplace until sometime next year as the OpenInvest team is spending the bulk of its time properly integrating with the bank’s different client channels and systems, Murray told Insider.
And even when those features finally roll out, the fintech expects there to be more work to be done.
“We’re going to be building for a long time. As those things start to have more data to do values alignment, we start to understand clients more. It’s that ongoing integration,” he said.
Partnerships are a key part of OpenInvest’s future
OpenInvest built its own ESG data aggregation and feeds it by partnering directly with non-government organizations (NGOs) because there wasn’t anything in the market fitting their needs prior to being acquired. But the fintech landscape changes rapidly, and there’s potential partners now.
“We’re starting to see a new crop of ESG fintech who are doing really cool things. So now we’re on the lookout for folks to collaborate with as the space continues to mature,” said Levin.
One new partnership will take place internally. OpenInvest will be working on integrating with 55ip, a tax management solution JPMorgan bought from Tifin’s CEO and founder Dr. Vinay Nair in 2020, to ensure clients’ sustainable investments are tax-efficient.
JPMorgan’s acquisition of OpenInvest occurred as demand for sustainable investments was on the rise. Sustainable investments topped $35.3 trillion at the start of 2020, a 15% increase from its 2018 figure, according to a report by the Global Sustainable Investment Alliance.
HSBC Asset Management invested in RadiantESG, a consulting firm that launched an ESG-focused investment management firm last year. BlackRock made an investment in a sustainability analytics and data-science platform called Clarity AI to boost Aladdin, its portfolio-management software.
OpenInvest is helping JPMorgan work with other fintechs
Murray and Levin told Insider that JPMorgan’s acquisition represents more than an opportunity to upgrade the bank’s sustainable investing offering. It’s also a chance to make the integration between JPMorgan and fintechs easier.
JPMorgan CEO Jamie Dimon has been vocal about the competition he sees with fintech startups. For many, their youth, smaller size, and ability to automate many processes makes them more nimble and affordable than the incumbent players.
Some banks have set out to acquire fintechs that can upgrade their systems. JPMorgan has either acquired or invested in more than a dozen fintechs over the past few years.
Though acquiring can be a faster way of upgrading a bank’s technology than building something in-house, it’s still a slow and daunting process to get a startup to fit within a bank’s larger and older systems. JPMorgan has been trying to change that since it tasked its head of innovation, Michael Elanjian, with quickening the pace of integrating with fintech partners.
Levin told Insider that OpenInvest is helping the bank create “new rails within the bank,” where fintechs not only transfer over technology to JPMorgan’s platform but also continue to innovate and “deliver code at the velocity” that provides the best of the startup and legacy institution.
“There are ways that the strength of JPMorgan could be playing with the strength of fintech better. As part of the acquisition and integration that we’ve done, we’re sort of more familiar with that interface and what it could look like. And so, we’re gonna be looking to work more readily with fintechs in the future,” Murray told Insider.