U.S. Bank has ownership stake in two fintech-focused venture capital firms, the $558.9 billion bank announced today. The VC firms are Fin Venture Capital and Commerce Ventures, which both invest in startups that work alongside banks.

David Ness, who leads the fintech engagement group, told Bank Automation News why U.S. Bank chose Fin Venture Capital and Commerce Ventures.

“These VC firms have a deep understanding of the fintech space, and are leaders in the industry,” Ness said. “Their ability to deliver tailored research and insights into emerging trends and our areas of interest, as well as the networks and relationships they have built, are extremely valuable as we engage in future partnership and investment opportunities.”

Fin Venture Capital has $200 million in assets under management, according to its website, with approximately 29 companies in its portfolio, including embedded finance company Array, cybersecurity company Axio, blockchain firm BrainTrust and “no code” enterprise application platform Unqork. It specializes in embedded finance, asset management/capital markets, CFO tech stacks, insurtech and blockchain enterprise applications.

Commerce Ventures’ website states it has $250 million-plus under management and 78 investments, including intelligent digital assistant company Kasisto, business-to-business payments company Resolve and U.K.-based real-time payment company Fidel.

The Minneapolis-based U.S. Bank did not reveal the acquisitions’ cost but said the deal had been arranged by the bank’s fintech engagement unit, formed five years ago to develop partnerships with emerging companies. This engagement unit has helped the bank enter several emerging areas, including cryptocurrency, distributed ledger technology, tokenization of assets and blockchain in foreign exchange conversion.

The acquisition comes at a time when global venture capital investment in fintechs is on track to beat the 2018 record of $54 billion, with more than $52 billion already invested at the mid-year point, according to KPMG.

Total global fintech investment reached $98 billion with 2,456 deals at midyear.

The investments will allow U.S. Bank to leverage the knowledge and resources of the VC firms to expand their networks for future partnership or investment opportunities, the bank stated.

“While we often build capabilities in-house, at times it’s simpler and more economical to integrate specific components from a fintech into our tools than to develop from scratch, such as with our recent acquisition of Bento Technologies,” the bank stated in a release.

U.S. Bank [NYSE: USB] was trading at $57.24, down 0.69% from market open as of 4:10 p.m. ET.

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