Realising they are under huge pressure from up-and-coming fintech firms, major banks have started putting money into the burgeoning sector, bringing the upstarts under their wing to to try and improve their own digital offerings. Here’s how:
Innovation
In March, Santander and Monitise came together to launch the UK’s first standalone ISA mobile app. The app gave consumers information about their ISA, allowing them to compare interest rates and keep track of the ISA deadline to ensure that they maximise their allowance. Users can also open new ISAs, upgrade existing accounts and make transfers.
Santander is also known to be experimenting with blockchain technology.
Accelerators
Working with Techstars, Barclays began its fintech investment accelerator programme in London in October 2015. 11 firms, 6 from the UK, descended into the Barclays Escalator space in East London where they could network and build their firms.
In June 2015, Deutsche Bank announced that it was launching three innovation Labs in London, Berlin, and Silicon Valley. In those labs it planned to screen up to 500 start-ups every year, who were focusing on a variety of fintech microsectors.
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Direct investment
Citigroup is far from the only major US institution doing fintech deals, but it is one of the most active, having completed 15 deals in the space between 2009 and 2015.
Investments cover a range of firms, including Betterment, an investment firm, and payment firm Square. JPMorgan, Morgan Stanley, and Goldman Sachs were also involved in investing in Square, launched by Twitter founder Jack Dorsey.
Investing in funds
Alongside the information services firm Markit, Deutsche Borse were co-lead investors in the IFM Fintech Opportunities Fund, which invests in new fintech firms in their early stages.
The fund was thought to be worth $50m in total. The investment was part of Deutsche Borse expanding its services portfolio.
Creating own fund
In July 2014, Santander, one if the most active banks in the fintech space, launched the Fintech Fund, which has since been renamed the Santander Innoventures fund.
The London based fund was run by Mariano Belinky, formerly of Mckinsey and co. It is based in London, but invests in firms around the world. The fund is 100% owned by the Spanish bank, but is a stand alone business.
