Santander (LSE: BNC) and Monitise (LSE: MONI) are at it again.
The two companies continue to flirt with each other, and this morning announced a new fintech (financial tchnology) joint venture. According to the press release, the joint venture has the potential to redefine and support financial services globally.
Monitise and Santander will each take a 50:50 share in the new venture, the benefits of which are clear for both parties.
Multiple benefits
By partnering up, Santander will gain access to Monitise’s world-leading mobile money platform. This includes Monitise’s new cloud-based platform designed to help banks collect and collate digital information for their customers.
Meanwhile, Monitise will benefit from a multi-million pound upfront licence fee, with further ongoing revenues expected to be generated by the initiative. This is in addition to the company’s 50% share of the business and opportunity to work with one of the Eurozone’s largest banks.
Both parties will commit £10m of capital each to the project over the space of two years. Through upfront fees and ongoing revenue related to the joint venture, Monitise should be able to realise a positive return on investment pretty quickly.
Important deal
The importance of today’s deal between Monitise and Santander shouldn’t be underestimated. The two companies have worked together in the past and, as I’ve speculated before, a tie-up could be on the cards in the near future.
Santander has long made it clear that the bank is looking to increase its online presence. Santander has 92m retail customers globally, of which only 12.2m do most of their banking with Santander. Management has stated that it wants to hike this figure to 17m by 2017, which the bank believes could add €2bn to €3bn of additional income.
And it seems that Monitise is a crucial part of this growth plan.
Working together
So far, Monitise and Santander have already collaborated on the development of three different mobile money apps for customers. The first was Yaap, Santander’s Spanish m-commerce joint venture with CaixaBank and Telefónica.
The second, Santander’s SmartBank app designed for students, and lastly, Santander recently released the UK’s first standalone ISA mobile app. Once again, the ISA app was designed in conjunction with Monitise.
Santander’s relationship with Monitise also gives the bank access to IBM’s technology and global presence. Monitise signed a joint-venture deal with IBM last August, which was once again focused on developing mobile banking solutions for the financial services industry.
Attracting customers
Monitise’s deal with IBM has already started to attract customers.
At the beginning of May, another European banking giant, Société Générale, released a mobile banking app that was developed with the support of IBM and Monitise. Also, Virgin Money and Turkey’s, Türk Ekonomi Bankası have both recently signed deals with Monitise.
So overall, today’s deal between Monitise and Santander is great news for both parties, but Monitise is set to benefit the most: the company has locked in a significant revenue boost while strengthening its relationship with a key partner.
