Santander and Monitise have launched a joint venture to support and invest in small business offering financial services technology.
The Spanish bank and the mobile payments software provider will invest up to £20 million over two years, and will also provide mentorship to firms looking to scale their operations.
It is not the first time Santander has invested in fintech, having announced a $100 million (£58m) venture capital fund last year to target e-commerce, online lending including crowd and social funding, and big data analytics.
Total global investment in fintech firms has boomed in recent years reaching $12.2 billion (£8.2bn) in 2014. This has also attracted the attention of large banks seeking to tap into the agility of smaller businesses that are unencumbered by regulation and not tied to legacy systems.
Santander's latest project will involve expanding its relationship with software firm Monitise, which received a £49.2 million investment from Santander last year, alongside Telefonica and Mastercard. Santander also created and launched an ISA mobile app in collaboration with the firm in 2014.
The new 50:50 joint venture will operate from London and will be led by Julio Faura, one of Santander’s innovation leaders, and chaired by Monitise founder Alastair Lukies, who recently stepped down as CEO role at the firm.
As part of the deal, Monitise will receive an up-front licence fee worth several million pounds, the company said, and expects to generate further revenues through the venture. The project will also involve access to Monitise’ cloud technology platform.
TechMarketView analyst Peter Roe commented: “This operation clearly intends to accelerate the rate of new proposition and service development.
“Mobile commerce is a very dynamic market, with rapid changes in technology as well as in customer behaviours and expectations.
He added: “This looks like a good way to ensure that the portfolios of both Monitise and Santander are cutting-edge and to maintain the momentum of the overall partnership, which is a crucial component of Monitise’s move to scale and profitability.”