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Fifth Third (FITB) Inks Deal to Acquire Fintech Company Provide

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Fifth Third Bancorp FITB has inked a definitive agreement to acquire Provide, a fintech company that specializes in handling lending and banking for healthcare providers. The buyout will expand its national digital capabilities.

The acquisition advances Fifth Third’s efforts in the digital innovation front and expands its focus on the healthcare sector by providing a digital platform for healthcare practices, and catering to the lending and banking needs of retail healthcare providers.

The acquisition is subject to customary closing norms, including regulatory approvals, and is expected to close by early August 2021.

Markedly, the bank has been an early investor in Provide since 2018, and started funding loans through Provide’s platform in 2020. Provide has originated more than $1 billion in commercial loans since 2016, while its collaboration with Fifth Third has provided core banking and payment services to numerous clients.

Presently, Fifth Third holds nearly $400 million of Provide’s loans but will retain all of its new originations. Also, Provide will retain its brand name and continue to operate as a separate business line.

The transaction is a strategic fit as it will enable Fifth Third to offer new clients its range of banking solutions and will facilitate it to capture growth opportunities. Moreover, it offers scope to diversify and increase fee revenues. In fact, the deal is expected to generate $6 million in revenues and $14 million of expenses in the ongoing year.

Since the healthcare industry is one of the fastest-growing segments of the U.S. economy, the move is likely to be beneficial for the company. Given the tremendous scope for growth, a number of other banks are venturing into the healthcare sector and cementing their presence.

In fact, in March, KeyCorp KEY unveiled a national digital bank for healthcare professionals. Bank of America BAC has also invested in payment processing services focused on healthcare providers.

Currently, Fifth Third carries a Zacks Rank #3 (Hold). The stock has gained 36.9% over the past six months, outperforming the industry’s rally of 24.8%.

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Bank of America Corporation (BAC) : Free Stock Analysis Report

Fifth Third Bancorp (FITB) : Free Stock Analysis Report

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Webster Financial Corporation (WBS) : Free Stock Analysis Report

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