Not all the banks may fully understand the threat they’re under from crowdfunding platforms, but Santander certainly seems to. The principle is, apparently: if you can’t beat them, join them – and then try to beat them again.
The high-street leviathan has just announced the launch of a $100m (£58.3m) fund to back financial technology (FinTech) start-ups. The London-based venture capital fund will invest up to $3m a time buying stakes in companies working in this sector, which covers everything from mobile banking and online lending to trading platforms,” according to the Evening Standard.
This move might be regarded as competing with the June's Funding Circle deal
Chief executive of Santander UK, Ana Botin, is reported as saying that the money will be invested across the world but much of it could end up in the UK, which “is leading the way in financial innovation, not just in Europe, but globally”. The UK currently accounts for an estimated two-thirds of investment in Europe’s FinTech businesses, including the likes of Funding Circle, Nutmeg and TransferWise.
This might be regarded as a vehicle that will compete with a deal announced back in June, when Santander agreed a partnership with Funding Circle, the peer-to-business (P2B) lending website, to refer small business customers that it turns down. In turn, Funding Circle will promote the Spanish bank’s current account and cash management services.
According to the Financial Times (subscription required), Santander’s move comes as prime minister David Cameron’s office prepares to launch FinTech UK, an industry body that is due to be unveiled this year. It has secured funding from the City of London and subsidised space from the Canary Wharf Group.