IBOS group member Santander’s UK base is establishing a $100m venture capital fund to invest in financial technology businesses, as a bid to keep up with the rapidly evolving financial services market.
The Spanish-owned bank says mainstream lenders have accounted for just 10 per cent of financial innovations while venture-capital backed firms have created 60 per cent.
In June, Santander agreed a partnership with Funding Circle, the peer-to-peer lending website, to refer small business customers that it turns down. In return, Funding Circle promotes Santander’s current account and cash management services.
Santander’s move comes as the UK is trying to position itself as the global leader in the field of fintech. Investment in fintech ventures has more than tripled over the past five years to $2.97bn in 2013, according to research from professional services group Accenture, with the UK and Ireland the fastest-growing region.
Experts have stated however that a variety of obstacles, including regulation and a lengthy and costly approval process, stand in the way of fintech growing big enough to seriously challenge high-street lenders such as HSBC, NatWest and Barclays.
Santander’s fund, which is based in London but invests globally, hopes to be fully committed within three years. The technology it backs could be introduced by Santander to customers, targeting companies active in online lending, digital delivery of services such as ebanking, and online systems for DIY investing.
Ana Botín, chief executive of Santander UK, said: “The UK is a global leader in financial innovation. The Santander Fin-Tech Fund builds on our philosophy of collaboration and partnership with small and start-up companies at Santander. In this case our aim is to provide fin-tech companies with much needed capital, whilst we gain knowhow and our customers benefit from the latest thinking.”
Find out more about the fund, via the FT, here.