NEW YORK (Reuters) - Banco Santander has partnered with San Francisco-based startup Tradeshift to provide supply chain finance to the 1.5 million businesses on the financial technology company’s digital platform.
The partnership will also enable Santander, the euro zone’s largest bank, to better deliver supply chain finance digitally to its existing clients, the companies said on Tuesday.
The joint offering, which is expected to be rolled out globally next year, will be initially available to the bank’s UK clients in late 2017, the companies said.
Santander and Tradeshift hope their collaboration will make it easier for businesses small and large to access affordable working capital, or the cash that businesses need to fund the execution of contracts and orders.
Founded in 2010, Tradeshift has developed a cloud-based platform that allows large companies to keep track of their entire supply chain, by connecting them to the often thousands of companies that they directly or indirectly do business with.
The platform also lets companies interact with each other, including purchasing and invoicing. Tens of billions of dollars are transacted monthly across the Tradeshift platform, according to the company.
Tradeshift’s platform makes it easier for banks to track the full supply chain of a large corporation in order to decide whether to offer financing to one of its suppliers.
For example, it could connect the suppliers of aluminum and other metals to the business that builds smartphones for a large technology corporation.
“Our goal is to be able to finance each transaction within the supply chain,” Alejandro Romanos, Santander’s global head of innovation in supplier finance, said in an interview.
The partnership is the latest joint effort between a large bank and a financial technology startup focused on modernizing finance through more user friendly and efficient technology.
In a bid to stay on top of the changes being driven by the fintech sector, banks have been partnering with young companies or backing them through dedicated corporate venture capital arms.
Collaboration has been accelerating over the past year, with startups realizing the benefits of tapping into the banks’ vast distribution networks.
Tradeshift inked a similar partnership with HSBC Holdings PLC earlier this year, and received funding from Santander’s venture capital arm in December.
“We are starting to see the emergence of the first platforms where there is more than one financial institution providing its services” Christian Lanng, Tradeshift’s chief executive and co-founder said in an interview.
Reporting by Anna Irrera; Editing by Leslie Adler