Switzerland-based bank UBS Group is setting aside hundreds of millions of dollars of its own money to invest in financial technology companies, according to newswire Bloomberg.
UBS last month hired Erasmus Elsner for its venture capital and growth equity unit but is reportedly still hiring for its dedicated corporate venture capital (CVC) team. It is planning a corporate venture capital fund to make investments between $10m and $20m in dozens of companies targeting bank/client engagement, investing and financing platforms and improving underlying operations of the bank, according to Bloomberg.
Mike Dargan, UBS’s Global Head Group Technology, told the newswire: “UBS wants to further engage with and support fintech firms. The new venture investment portfolio is a next step to accelerate our innovation and digitisation efforts.”
UBS’s main local rival, Credit Suisse Group, has been investing for the past decade in fintech through its Entrepreneur Capital unit (formerly known until last year as SVC – Ltd. for Risk Capital for SMEs). Credit Suisse Entrepreneur Capital in February last year increased its total investment by a further CHF70m ($71m) to CHF200m – of which CHF30m has been invested in fintechs.
Many of the leading banks and insurers, such as Axa and HSBC, are now engaged in corporate venturing but few have gone as far in understanding how to integrate the innovation tool as a holistic understanding of the entire model as Silicon Valley Bank, which is co-chairing with Avanta the fintech CVC roundtable at next week’s GCV Digital Forum on 3-4 June.
As intangibles and ability to raise capital start to increasingly affect credit risk, the use of CVC becomes more important than just spotting a new tech capability. Integrating the knowledge of disruption and innovation into sophisticated understanding of how capital markets and repayment rates will vary will decide who becomes the world’s most important financiers of the 21st century.
UBS, sadly, is two decades late to the game.
