Santander Buys Stakes in 3 Startups in a Push Into Fintech

Banco Santander, Spain’s biggest lender, bought minority stakes in three financial-technology firms as Chairman Ana Botin makes machine learning a hallmark of her growth plan, accoridng to Bloomberg.

Santander InnoVentures is investing in Pixoneye and Curve, both based in the U.K., and Gridspace, located in the U.S., according to a statement. Terms weren’t disclosed. The acquisitions bring the number of fintech firms in the bank’s portfolio to 15.

The $200 million fund is the most active bank-backed investment vehicle in fintech, according to research firm CB Insights. The latest crop shows how Santander InnoVentures is now hunting for fintech plays that utilize machine learning to better understand customer behavior.

Pixoneye’s algorithms can build a profile of a consumer from photographs stored on his or her smartphone or other device, while Gridspace utilizes artificial intelligence to analyze the sentiments of people on phone calls with customer service representatives. It will be easier to automate call centers if machines can adjust on the fly to frustrated or pleased consumers, said Mariano Belinky, Santander InnoVentures’ managing partner.

"This is the type of technology that can help us break the most costs out of customer services," said Belinky, a former McKinsey & Co. risk-management consultant who set up Santander InnoVentures with Botin’s blessing three years ago. "We’re looking for more specialized and focused solutions, AI with a purpose.

Citigroup, Barclays and Banco Bilbao have also been especially active in using accelerators and venture funds to find promising new business models. Corporate investments now account for more than a third of the funding for fintech startups worldwide, compared with 22 percent in March 2016, according to CB Insights.

At Santander, almost three-quarters of the companies in InnoVentures’ portfolio are at various stages of making their offerings available to the bank’s customers. Atlanta-based Kabbage, for example, originates loans for small-business borrowers in Santander’s U.K. unit.