NUCLEUS Financial has underlined its confidence in its growth prospects by clinching a £1.5 million acquisition amid the uncertainty caused by the coronavirus crisis.

The Edinburgh-based financial technology firm has agreed to buy a business it has been using to provide back office services in a move that directors expect will help it increase profitability.

The acquisition of operations that run under the OpenWealth name from GenPact will result in around 130 people who work for the business in Glasgow transferring to Nucleus.

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This has carved out a prominent position in the market for the provision of online wrap platforms that people can use to help manage their investment portfolios.

Demand for platforms is growing as people are having to take more responsibility for saving for retirement.

The coronavirus crisis has resulted in a period of volatility on global stock markets. However, Nucleus directors are confident the fundamentals of the platform market remain attractive.

They reckon the acquisition of the OpenWealth operation in Glasgow will increase Nucleus’s ability to capitalise on the resulting opportunities.

Staff in the OpenWealth Glasgow operation have been providing services such as account opening and closing and payments processing for Nucleus.

By bringing services in house Nucleus expects to be able to speed up its product development work and to increase profit margins.

Chief executive David Feguson said: “We expect the greater control afforded by the acquisition to further strengthen our positioning as we pursue our goal of being the most tech-enabled wrap platform in the UK.”

He added: “The Nucleus / OpenWealth combination has worked well for the better part of a decade and bringing the two together will allow us to focus more than ever on developing our online product and offline service.”

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Nucleus has agreed to pay cash to buy the OpenWealth business.

The deal is expected to complete by the end of the year.

Nucleus directors are confident that it will boost net earnings from 2021.

Nucleus has been paying a fee for OpenWealth’s services based on its total assets under management. This means fees increase in line with assets under management.

Following the acquisition the costs will be largely fixed.

Analysts at the company's house broker, Shore Capital, estimate that Nucleus will be able to achieve cost savings of £0.8m in 2021, rising to £2m in 2022.

The deal is expected to result in total employee numbers at Nucleus increasing to around 380.

“Given that the activity was increasingly non-core to OpenWealth we expect the career opportunities now created for the transferring staff to ensure a smooth transition,” wrote Shore capital analysts.

Nucleus plans to move staff to a new Glasgow city centre office when the lease on the current facility ends in June.

The Aim-listed firm suffered a small drop in the total value of assets under administration on its systems in the six months to June overall, from £16.1billion to £15.8bn. In the following three months it recovered the ground lost.

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The company has continued to increase employee numbers this year.

In September Mr Ferguson said Nucleus planned to keep on hiring over the following six months and described the platform market as a “five, ten, 20-year story”.

He said yesterday that sales momentum had picked up since September, but added: “We are obviously aware of the extreme uncertainty all around us.”

Nucleus had £18.7m cash at the end of June and no borrowings.

It has increased customer numbers to more than 100,000 this year, from 95,657 at the end of June last year.

Nucleus Financial shares closed down 5.5p at 111p.