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Banco Santander and Monitise are jointly funding a programme that will invest in startup IT firms focused on financial services technologies.
Participating startups will receive funding, advice and access to Monitise's cloud-based platform. The UK-based mobile banking software company is looking for new growth and spanish bank Banco Santander, which is already a major customer, invests in IT startups.
In January 2015, Monitise put itself in the shop window, announcing that it could benefit from being part of another business.
Shares in the firm dropped by 10% on news that it was expected to report a drop in revenues. Monitise said at the time that it was reviewing its options – including being taken over.
But following a strategic review, the company said: “The board has concluded that the best way of maximising long-term value for shareholders is to continue as an independent company.”
At the time, José María Fuster, corporate director of innovation at Monitise customer Banco Santander, said the software provider is uniquely well positioned as an independent player in the fast-growing digital money space.
“We have already through our partnership with Monitise developed some market-leading propositions for our customers and intend to continue doing so through what we expect to be a long and mutually beneficial collaboration,” he said.
Monitise is expected to grow its client portfolio by providing services to the companies the joint venture will support.
Both Monitise and Banco Santander have committed to providing up to a maximum of £10m of capital each to the joint venture over two years.
The deal demonstrates the shared interest in financial technology companies in the IT supplies and banking sectors. The banking industry needs suppliers and banks to work together because both sides bring essential expertise. For example, banks understand regulation while IT companies are more au fait with developing software around customer needs.
Speaking at the SAP forum, Royal Bank of Scotland (RBS) director of design Kevin Hanley said in a bid to keep pace with change, RBS has teams of people looking at thousands of technology companies all over the world to see what technologies the bank can use.
However, while the banking expertise of RBS staff can help make fintech ideas work, Hanley warned that although it is easy to find thousands of these firms, filtering them and deciding how to progress them into the pipeline is more challenging.