Citi says it is investing in Peruvian foreign exchange (FX) FinTech Rextie.
“The investment makes Rextie Latin America’s first FX FinTech to receive an investment from one of the largest banks in the world,” Citi said in a news release Thursday (Aug. 24).
In addition to the investment, the banking giant said it will also integrate its foreign exchange technology into Rextie’s currency exchange services.
“Going forward, Rextie will focus its efforts on attracting more small- and medium-sized businesses, including customers involved in import and export activities,” said Mateu Batle, Rextie’s co-founder and CEO. “Also, we will accelerate our growth supported by our experience, the knowledge and specialized technologies that will be empowered by Citi.”
According to the release, Rextie expects by next year to have exceeded $7 billion dollars exchanged in the platform since its launch.
The investment comes from Citi’s Institutional Strategic Investments arm, which invests in FinTechs aligned to Citi’s institutional businesses. The companies call it a demonstration of how FinTechs and banks “can collaborate to reinvent and innovate financial services in the region.”
The rise of those collaborations is something PYMNTS has been tracking for some time, as the continuing digital shift puts pressure on these financial institutions to join forces.
“It’s a reevaluation of the question of build versus buy versus partner,” Igor Bazay, head of finance at Enigma, told PYMNTS in April.
“[W]hat this environment shows is that partnerships should be a part of that conversation to an extent that they were less so in the last couple of years,” he added.
PYMNTS research in “The FinTech-Bank Relationship Shifts Toward Collaboration” found that 65% of banks and credit unions have embarked on at least one FinTech partnership in the past three years, with 76% of banks seeing FinTech collaboration as necessary to addressing customer expectations.
“The new financial services landscape is being reshaped by ongoing partnerships and collaborations that focus on the same end goal: improving the user experience,” PYMNTS wrote in June.
“By using flexible deployment options, including application programming interfaces (APIs) and customizable feature sets, collaborations between banks and FinTechs allow firms on either side of the partnership to come away with value-add integrations,” PYMNTS added.
A number of major financial institutions, J.P. Morgan and American Express among them, have acquired FinTechs, and banks’ general interest in FinTech purchases has risen noticeably. Partnerships have grown even more popular: The number of banks that consider bank-FinTech partnerships as at least somewhat important came to 89%, compared to 49% in 2019.
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