Recent earnings reports from banks such as Fifth Third, The Bancorp, and Pathward reveal a growing trend of leveraging FinTech partnerships to bolster deposit growth and revenue streams. Fifth Third's second-quarter results highlighted a significant increase in deposits linked to its embedded finance platform, Newline, which saw a $2.1 billion rise in deposits and a 35% year-over-year increase in fee revenue. This platform connects FinTechs and enterprises to Fifth Third’s banking infrastructure, allowing the bank to expand its customer base beyond traditional branch networks.
The Bancorp has adopted a more FinTech-centric model, with its partnerships accounting for an impressive 93% of total deposits. The bank reported average deposits of $8.32 billion, driven by its focus on the FinTech ecosystem. Additionally, The Bancorp's gross dollar volume from prepaid, debit, and credit cards rose 18% year-over-year, underscoring the financial benefits of its embedded finance strategy.
Pathward presents an alternative model by combining partner-generated deposits with custodial services for deposits held at other banks. As of March, Pathward managed $1.07 billion in customer deposits at partner banks, generating $7.8 million in servicing fees, reflecting the growing importance of custodial relationships in the embedded finance space. The diversity in these approaches illustrates how banks are adapting to the evolving demands of businesses seeking embedded finance solutions.
The PYMNTS Intelligence report indicates a strong appetite among middle-market companies for enhanced embedded finance capabilities, with 79% planning upgrades within the next year. As companies increasingly turn to third-party providers for these services, banks are well-positioned to capture the underlying economics of these partnerships, especially as the demand for integrated financial solutions continues to rise.
The Bancorp has adopted a more FinTech-centric model, with its partnerships accounting for an impressive 93% of total deposits. The bank reported average deposits of $8.32 billion, driven by its focus on the FinTech ecosystem. Additionally, The Bancorp's gross dollar volume from prepaid, debit, and credit cards rose 18% year-over-year, underscoring the financial benefits of its embedded finance strategy.
Pathward presents an alternative model by combining partner-generated deposits with custodial services for deposits held at other banks. As of March, Pathward managed $1.07 billion in customer deposits at partner banks, generating $7.8 million in servicing fees, reflecting the growing importance of custodial relationships in the embedded finance space. The diversity in these approaches illustrates how banks are adapting to the evolving demands of businesses seeking embedded finance solutions.
The PYMNTS Intelligence report indicates a strong appetite among middle-market companies for enhanced embedded finance capabilities, with 79% planning upgrades within the next year. As companies increasingly turn to third-party providers for these services, banks are well-positioned to capture the underlying economics of these partnerships, especially as the demand for integrated financial solutions continues to rise.
Source: PYMNTS
