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Investec, the Anglo-South African lender, is teaming up with UK fintech MarketInvoice, in the first move by a bank to outsource the provision of some of its client-facing banking services to a technology platform.
Under the partnership, MarketInvoice, which manages small-company loans online, will provide digital invoice finance and business loans services for the specialist bank, handling the underwriting and payment processing for its customers.
Investec will provide about £50m to fund the invoice finance deals in the first year, MarketInvoice said.
There have been a number of partnerships between banks and online lenders in the past two years, catering to smaller and medium enterprises looking for quick ways to access funding.
Last year, Santander joined forces with online lender Kabbage in order to provide small businesses with loans more swiftly, using the fintech’s technology.
But the latest deal constitutes the first move by a bank to fully rely on an external provider to carry out those banking services.
The move also comes as the banking sector prepares for European regulations coming into force in mid-January that threaten to loosen the stranglehold of the banking oligopoly — HSBC, Barclays, Royal Bank of Scotland, Lloyds Banking Group and Santander — in the UK.
Under the so-called open banking rules, they will be asked to open up, with customers’ consent, archives of spending data collected over many years and, for the first time, provide other companies — from technology groups to retailers — with access to the information.
For fintechs, this presents an opportunity to monitor and access the customer base of larger rivals and could accelerate collaboration between traditional financial institutions and start-ups.
“We believe there is much scope for traditional banks to partner with the latest fintech players, to better service the market,” said Anil Stocker, co-founder and chief executive at MarketInvoice. “Open Banking should encourage and empower banks to deliver the highest innovation and customer service to their customers.”
Investec could not be reached for comment.