Big banks' fintech investing strategies are shifting at a crucial time in the nascent industry's development.
This year, big banks seem more eager to partner with or buyout startups challenging crucial lines of business in the financial services industry. It comes after years of banks' simply being willing to buy in as minority stakeholders in startups. Fintech, or financial technology, is used to make financial services more efficient.
More recently, banks are committing big bucks to buyouts. It comes after a year in which fintech funding hit new highs. Ally Financial bought online brokerage TradeKing Group, the firm announced earlier this month, in a $275 million deal. BlackRock also decided to tap into fintech, last August, with the $150 million acquisition of online investment firm FutureAdvisor.
Banks aren't always spending to buy startups with big-name investors — or big price tags. When Goldman Sachs last month bought Honest Dollar, the Texas-based online retirement planning service, the startup had raised just $3 million in venture funding, according to Crunchbase. The bank didn't disclose its purchase price and didn't comment on the deal. TradeKing, as well, raised less than $10 million in venture funding, according to Crunchbase.