New radical legislation of European Union banking encourage banks and fintech startups to bind, so Investec Asset Finance has designed a trial program with MarketInvoice Ltd.
London-based MarketInvoice is a finance intermediary which allows businesses to sell their unpaid invoices to provide working capital. It was the UK’s first online marketplace allowing companies to selectively sell outstanding invoices to raise working capital. Launched in February 2011, the platform allows small and medium-sized businesses to trade their invoices with institutional investors online.
MarketInvoice is a member of the Peer-to-Peer Finance Association. Funding through the platform is provided by investors from around the globe, including the UK Government-owned British Business Bank.
Investec Asset Finance is an international specialist banking and asset management group. It provides financial products and services, imbued with a personal approach. Founded in South Africa in 1974, Investec Asset Finance entered the UK in 1992 and expanded through a combination of substantial organic growth and strategic acquisitions.
Today Investec employs more than 9,900 people worldwide and is listed in London and Johannesburg. It focuses on delivering distinctive profitable solutions for clients in three core areas of activity: Asset Management, Wealth & Investment and Specialist Banking.
The deal between MarketInvoice and is not the first one in a number of tie-ups between companies providing traditional financial servises and online lenders of the UK. In August, Dutch insurer Aegon NV provided 160 million pounds for Funding Circle Ltd. to enable small companies to get loans. Three months later, LendInvest Ltd. raised funds from Citigroup Inc. to offer mortgage loans on its website.
Anil Stocker, MarketInvoice co-founder and chief executive officer, said that due to the EU’s new open banking law there may be more deals in 2018. He said: “There are a lot of banks looking for ways to collaborate with fintechs.” Then Stocker added: “We think that open banking could be a bigger shift in the market than Brexit.
The partnership between MarketInvoice and Investec Asset Finance came in the wake of success of MarketInvoice in completion of an 18-month due diligence and compliance phase. According to the bank’s website, MarketInvoice will deal with the underwriting for Investec customers.
Investec will use MarketInvoice’s proprietary technology to originate and underwrite credit decisions. In the first year of this cooperation Investec will provide 50 million pounds ($67 million) to fund the loans, and the funding will be available to deploy via the platform.
MarketInvoice will conduct the credit risk analysis, underwriting and payment processing for all Investec clients.
Believing that the advent of Open Banking will actuate new business channels for both established banks and fintechs, Anil Stocker says: “We believe there is much scope for traditional banks to partner with the latest fintech players, to better service the market. Open Banking should encourage and empower banks to deliver the highest innovation and customer service to their customers.”