EU law sees banks, such as Investec, and fintech start-ups get together
London — In a sign that a sweeping new EU banking law may be spurring banks and fintech start-ups to tie-up, Investec Plc has formed a pilot programme with MarketInvoice, a British online lender to businesses.
London-based MarketInvoice, which arranges loans for small companies secured by accounts receivable, will handle the underwriting for Investec customers in the partnership, according to the bank’s website. Investec will provide £50m ($67m) in the first year to fund the loans, Anil Stocker, the start-up’s co-founder and CEO, said in an interview.
A spokesperson for London-and Johannesburg-based Investec declined to comment.
The deal is just the latest in a series of tie-ups between traditional financial services companies and UK online lenders in the last year. In August, Dutch insurer Aegon placed £160m with Funding Circle for loans to small companies. Three months later, LendInvest raised funds from Citigroup to offer buy-to-let mortgages on its website.
More deals may be coming in 2018, thanks to the EU’s new open banking law, Stocker said, even as the UK’s departure from the EU appears to slow down the British economy and stoke inflation. The legislation, set to take effect in January, will direct lenders to share their clients’ financial data with rivals to bolster consumer choice in financial services.
"There are a lot of banks looking for ways to collaborate with fintechs," Stocker said. "We think that open banking could be a bigger shift in the market than Brexit."