Paving the way for innovation

Paving the way for innovation

BQ Yorkshire Editor Mike Hughes finds out what Innoventures are, from Santander’s Richard Brown.

The Innoventures of Richard Brown might not seem like the most obvious Indiana Jones spin-off, but Richard’s work is certainly in the spotlight at the moment. Richard works with Santander’s new $100m Venture Capital fund, which provides Fin-Tech companies with much needed finance, as well as supporting the digital revolution to ensure Santander’s customers world-wide benefit from the latest know-how and innovations across the banking group’s geographies

Much of the fund’s investments will cover six core areas:

  • Digital delivery of financial services to reinforce distribution and the overall customer experience
  • Payments
  • Online lending using new data sources to provide better access to credit, including crowd and social funding
  • E-Financial investments – online systems to distribute financial investment products
  • Big data analytics – platforms to leverage information to provide better services to customers.
  • Anti fraud

But by its very nature, Fin-Tech funding has to be organic to grow with the market. “We had noticed the venture capital community has been very interested in Fin-Tech for a while, so setting up the fund was one of the bank’s responses under Santander CEO Ana Botin’s leadership to help the bank become more forward thinking by deploying and learning from innovation happening outside the bank,” says Richard.

“We are looking at businesses doing positive things in the financial services arena, businesses where we really think we can add value by enabling them to deliver something beneficial for our customers or businesses we can learn something from.”

The arrival of new sectors like Fin-Tech and their ability to hit the ground running are what keeps the finance firms buzzing. Trends can be a distraction and have a limited lifespan, but the ability to spot the stayers – and the agility to capitalise on them quickly and create a strong market from small beginnings – is constantly transforming the business landscape.

It is almost as if the rise of the Fin-Tech companies is not so much servicing a gap in the market as creating a gap that we didn’t realise was there. Entrepreneurialism doesn’t come much fresher than this.

For Richard, the desire to ride that wave is a personal and professional one. “From a personal point of view I am an enthusiast for innovation and see it as key for the future of financial services. I love to be involved with entrepreneurial businesses and this is a great position from which to help them.

“But there is also an extra dimension to having a fund that is part of a bank which ‘gets’ innovation and wants to extend the process. The start-ups we have been working with are delighted with how the fund has acted as a catalyst, getting other parts of the bank working with and supporting their businesses”

“There is a plugging of market gaps to some extent, to support customer groups who aren’t well served at the moment, but there is some terrific innovative thinking going on. I think it is coming in from all over, from universities to people who have worked in financial services and have seen something not being done very well and have a vision to change it.

“Also, you will get people coming in from outside of banking, who have a completely different take on things.

“This all means that while old methods still tend to be used alongside new methods, change will continue.”

A strong team is one of the first things a potential investor will look for in any sector, and Fin-Tech is no different. “It also needs to be a business that can grow to scale and one where we can be of material help over and above the equity investment. For instance, which particular customer groups can we help them access – and where might they be?

“Tech is global and the UK regulatory framework, and the market, is a great place to build a Fin-Tech business. The framework is flexible and pretty big and there is a welcoming and high-quality regime to support it.”

This all seems very rosy and there is rightly a high degree of confidence that Yorkshire will be playing a key role. So are there any challenges looming? There is a long pause from Richard, suggesting that they are hard to find at this early stage.

“I truly think the UK is pretty well placed and we have the best chance we could have. Firms that want to grow should always think about how regulation is going to affect them now and in the future and that is something we can help with.”

In the near future, the fund will be announcing more transactions, Richard’s team will be built up and there will be more commercial engagement with the companies. That internal collaboration between Innoventures and the main bank is an interesting one and illustrates both sides of the coin.

It says clearly that the fund can be viewed as independent and can almost have a customer relationship with its own bank, but that also it has that wealth of knowledge and support behind it. Just as important to Richard and the team, when they agree an investment from the $100m, is that they engage with the bank’s other departments across the board, to see what more help and support can be gained.

Everybody wins – which seems to be the motto of this lively and seemingly endless new sector.