Yahoo Finance Fifth Third (FITB) Buys Embedded Payment Platform Rize Money
Fifth Third Bancorp FITB, through its indirect wholly owned subsidiary, recently acquired Rize Money, Inc., an embedded payments platform. With this buyout, the bank has expanded its embedded payments offerings.
Markedly, Rize Money offers risk management solutions and payment infrastructure to fintechs and other technology companies. This enables its clients to provide innovative financial products through a single application programming interface.
FITB management noted, “This acquisition is another example of Fifth Third’s commitment to leveraging technology and innovation for the benefit of our clients.”
The embedded payments business’s double-digit growth and projection of annual revenues of more than $130 million for the ongoing year make it an attractive space for growth. Hence, FITB’s efforts to expand its embedded payments business through this acquisition is a strategic fit.
It will also help the company cater to clients' needs for risk sophistication and a comprehensive range of payment types. Moreover, the buyout will complement the bank’s Treasury Management businesses. The buyout is likely to increase the company’s treasury management fees, thereby propelling service charges on deposit and total fee income.
For 2023, we estimate the company’s service charges on deposits and fee income to be $566.9 million and $2.84 billion, respectively.
Markedly, the company has expanded its fee-income base over the years on strategic acquisitions, thereby enhancing its digital bank product offering. Last week Fifth Third completed the previously announced acquisition of Big Data Healthcare. This adds national healthcare revenue cycle capabilities, advancing its digital payments and managed services offerings. Prior buyouts of Dividend Finance and Provide expanded its commercial verticals.
Amid the rising funding cost scenario, which is expected to affect net interest incomes for banks, FITB’s efforts to fortify top-line growth by improving fee income sources is a strategic fit.
However, over the past six months, shares of FITB have lost 29.9% compared with the industry’s decline of 15.4%.
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Currently, FITB carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Efforts by Other Banks
Amid a challenging operating backdrop due to expectations of economic slowdown, banks are undertaking expansion moves through acquisitions. Recently, LCNB Corp. LCNB entered into an agreement to acquire Cincinnati Bancorp, Inc. CNNB in a stock-and-cash transaction. Closing of the deal, subject to regulatory approval, CNNB shareholder approval and other customary conditions, is expected in the fourth quarter of 2023. The approval of LCNB shareholders is not required.
The deal is expected to significantly increase LCNB’s existing presence in the Cincinnati market and expand its community banking franchise across the Ohio River into the compelling Northern Kentucky market. Excluding one-time transaction costs, LCNB expects the transaction to be 18.2% and 26.2% accretive to 2024 and 2025 fully diluted earnings per share, respectively.
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