Garnet Capital Advisors Blog

Business growth at large regional bank Fifth Third and eBay’s recent announcement of Apple Pay and Square as digital providers give further proof that FinTechs power financial services firms.

Several recent deals illustrate how advantageous FinTech has become for financial services and other firms in growing businesses and attracting clients. 

FinTechs are contributing to rising revenue for Fifth Third, a large regional bank.

Fifth Third: Fintech Generates Revenue

Bank Innovation recently reported that Cincinnati-based Fifth Third, for example, expected to regain all the $100 million it had poured into FinTech during the last nearly two-year span by 2019. Not only will the investment be recouped soon due to revenue FinTech contributes, bank officials said, but they expect nearly $100 million in revenue contributions every year from FinTech. 

Fifth Third, one of the U.S.’s largest regional banks, reported a nearly 80% rise in business use of its mobile solutions between the third quarter of 2016 and the third quarter of 2017. 

Digital checking accounts climbed 25% and mobile log-ins increased 40% during the same period.

Company officials observe what is increasingly becoming a truism in the financial sector: partnerships between FinTechs and banks draw consumers, and because consumers are pleased, the partnerships are good business for both. 

That’s a sea change from the days — not so long ago — when financial institutions regarded FinTechs as competitors.

Fifth Third’s digital strategist believes that 80% of FinTech’s strengths are opportunities for banks.

The bank has established relationships with several FinTechs, including Transactis, for electronic billing; AvidXchange, which specializes in billing solutions; Dade, specialists in augmented reality (AR) and mobile payment solutions; Solstice, which works with the bank’s app; and P2P company Zelle.

Apple Pay will become a digital payment provider for eBay.

eBay Partners with More Digital Providers

The second piece of FinTech news concerns tech shopping platform eBay, whose $88.4 billion in shopping during 2017 moves a lot of money from consumers to merchants.

eBay, of course, grew up with PayPal as its digital transaction company. It still uses PayPal and will do so through at least 2023, but a separation agreement means that the two must part company a bit, at least to the terms of the agreement. 

But eBay diversified its digital payment and transaction options recently. Bloomberg reported its announcement that it will accept Apple’s digital payment system, Apple Pay, and also offer loans to its merchants via Square. The loans have a maximum limit of $100,000.

The move is an advantageous one for Apple Pay, whose customer use has been a bit slower than projected. Many consumers use credit cards or bank cards instead of Apple Pay, which has a lower base for merchant use than PayPal.

But it also illustrates how mainstream all forms of digital transactions are becoming. PayPal is no longer one of the few games in town; it’s a trailblazer about a method rather than a unique company. Digital transactions and FinTech are the way of doing financial transactions for the future, not an alternative.

Our Whole Loan Brokers Can Assist Your Institution

The financial world is going digital and it is time to join the wave. If your institution hasn’t caught the wave yet, there are numerous opportunities. Let the whole loan brokers at Garnet Capital introduce your bank to appropriate partners in FinTech. 

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