Banks waking up to fintech threat throw billions into digital

Scrappy online financial startups have spent the past few years building buzz, backing and the beginnings of a customer base. For a while, the world’s banking giants largely ignored them. Now they’re starting to feel the heat-and fighting back with the most formidable weapon in their arsenals: cash. Spain’s Banco Santander SA announced a few weeks ago that it will funnel €20bil (RM93.48bil) into digital transformation and information technology in the next four years. On an annual basis, that works out to one-and-half times all of the venture capital Europe’s fintech startups received in 2018 – a disparity highlighting that, despite all their rhetoric about burying existing banks, fintech firms and neo-banks are still monetary pipsqueaks facing an uphill battle against entrenched competition. “I am more pessimistic than ever for these startups,” said Mark Tluszcz, a partner at Luxembourg-based venture capital firm Mangrove Capital, who’s been a vocal skeptic of the fintech sector. “Even though we all love to hate our bank, we still fundamentally trust the bank that, if we put our money there, it is not going to disappear overnight. And the fintechs have struggled to win that trust.”