If you can’t beat them, buy them? In a digital push, the bank’s VC fund will invest in fintech startups.

Swiss banking giant UBS Group AG (NYSE: UBS) is planning to invest hundreds of millions of dollars in upstart fintechs through a proposed corporate venture capital fund. According to a Bloomberg report, the bank is seeking to jump-start its digitization by investing in high tech startups that are threatening banking incumbents. (FinanceMagnates)

UBS’ fintech targets

The new UBS venture fund will look for investment opportunities in the range of $10 million and $20 million with a time horizon of at least five years. According to the report, UBS could invest in “dozens of companies” and the vetting process has already commenced.

People in the know said UBS is eyeing three fintech sub-sectors: client engagement, investing and financing platforms, and startups focused on banking operations.

The bank has also reportedly started hiring a special team for the venture fund.

UBS may be taking a leaf out of competitor Credit Suisse’s book (NYSE: CS). The latter also follows a similar strategy to pick technology-rich startups through an in-house venture capital arm.

Technology imperative

“UBS wants to further engage with and support fintech firms,” said Mike Dargan, the bank’s Global Head Group Technology to Bloomberg. “The new venture investment portfolio is a next step to accelerate our innovation and digitization efforts.”

Further, Ralph Hamers, who succeeds Sergio Ermotti as the incoming CEO on 1 November 2020, is a known proponent of digitization, as known from his tenure at ING.

Meanwhile, the COVID-19 pandemic has turned erstwhile cozy wealth management relationships on their head, with social distancing and video-conferencing becoming the order of the day. Digitization has gatecrashed these parties too.

The Swiss bank is also turning to technology for saving costs on its banking operations.

It has offices sprawled across 50 countries and assets worth approximately $1 trillion.

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