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Santander InnoVentures’ Head of Investments and Partner, Manuel Silva Martínez, says that, in a world where all businesses, small or large, have been affected by the current crisis, Fintech innovation is needed now more than ever to help society shift to new ways of operating. 

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Manuel Silva Martínez, Santander InnoVentures’ Head of Investments and Partner.

Stay-at-home orders across the world are forcing changes in how individuals and companies interact with their ecosystem, how they consume goods and services and how they produce, save and plan their long- and short-term finances. While entrepreneurs are best equipped to adapt to such fast-changing market conditions given their innovative and nimble character, the severity and rapid advancement rate of the coronavirus pandemic has affected many FinTech businesses nonetheless. 

Manuel outlines three Fintech categories which have particularly suffered in the early days of the pandemic: 

  • Those exposed to activities that have plummeted as a result of demand-side shocks, such as start-ups exposed to offline commerce and payments, or those servicing the hospitality, airlines or real estate sectors among others.
  • Lending companies at large (although at different levels depending on the type of lending businesses they carry out), as they now need to reassess risk policies for the future and evaluate the health of their existing credit portfolio.
  • Finally, companies exposed to the capital markets, either because they need access to them to finance themselves, or because they operate in new, emerging or experimental asset classes such as tokenised assets.


In addition, across all FinTech sub-sectors, certain stages of a start-up’s lifecycle are particularly vulnerable to the current situation. For instance, any company in the process of fundraising or which was about to fundraise has shifted their focus to their existing investor base for those new funds rather than facing the uncertainty of finding new outside investors. M&A transactions have also been delayed or put to a stop as the crisis has likely affected the counterparts in the transaction. And even for those start-ups adequately funded and initiating a new phase of growth (e.g a company about to speed up marketing or hiring, or launch a large CapEx investment plans) have dramatically changed their short- to medium-term plans. 

On the other side, any crisis is an opportunity, and short term opportunities have indeed arisen for some FinTechs that are actually seeing their best weeks ever. For instance, those who are digitising customer journeys in the mortgage space, auto finance, logistics or ecommerce (from on-boarding to infrastructure, transactions processing or customer support) are seeing acceleration in demand as they typically serve incumbents who now need to migrate faster than expected to digital delivery models. Similarly, companies that relate to financial health or long-term financial planning are seeing increased demand as people refocus on their financial situation and reassess both short-term credit availability and long-term financial prospects. Finally, companies related to trading or crypto exchanges have seen spikes in activity as investors have wanted to take advantage of market volatility in the early days of the crisis.

While it’s still too early to say, some of these short-term opportunities may be conducive to longer-term differentiation for FinTech as well. For instance, for those enabling new customer journeys today, the emergence of new services for telemedicine, telework, new ways of transportation, delivering content, organising work and improving productivity may constitute new business opportunities to explore in the near future. 

Similarly, government programmes are commanding massive mobilisation of resources that will eventually flow back into the economy and capital markets, and certain FinTechs may be in a good position to turn it into more and more diverse business opportunities. 

Finally, and this time from a market structure perspective, the crisis might provide the right environment for some FinTechs to consider consolidation, either horizontally with competitors in and across markets or with partners through vertical integration. 

While the market observes the macroeconomic trends affecting the Fintech landscape, one cannot forget that each start-up’s reaction to the changing environment is a collection of individual decisions and very personal stories affecting small groups of talented people trying to turn their vision and ambitions into reality. The team at Santander InnoVentures prides itself on their close and trusted relationships with their portfolio companies, and as such have seen first-hand that those who are able to adapt quickly, preserve cash, and prepare for future opportunities are finding ways through the crisis. 

Manuel said: “Santander InnoVentures has invested in over 30 FinTechs across the Americas, Europe and Israel in the past five years, and across the entire span of financial services. Drawing on Santander’s more-than 160 years of experience means we are well-placed to help FinTechs understand the environment we face and give expert advice on financial services matters and any other matter than can help entrepreneurs navigate these difficult times.

As an example, our geographic diversity means, among many things, that we learn from different business models around the world that succeed under very different market conditions and we can help our portfolio companies take advantage of that knowledge for their own businesses. We also foster cross-portfolio knowledge sharing, and generally offer entrepreneurs our time as an additional resource at their service. Also, true to our mandate, Santander InnoVentures is not only an investor but also fosters partnerships with InnoVentures’ portfolio companies to integrate their services into Santander’s offering for the benefit of our customers. Doubling down on those partnerships at this very crucial juncture is the best way to help contribute to the success of our portfolio companies and be the best possible partner to our start-ups.” 

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