Huntington National Bank has joined the ranks of conventional banks buying financial technology companies.
The Columbus, Ohio-based bank,which has a substantial presence in Detroit and throughout Michigan, announced Thursday that it had acquired San Francisco consumer payments company Torana Inc. for an undisclosed price.
The acquired technology will launch as Huntington ChoicePay, a business-to-consumer payment solution, according to a news release.
“Torana’s acquisition aligns with our enterprise payments strategy of servicing clients across businesses of all sizes and enables us to maintain a leadership position within our commercial banking segment and further develop additional scale in verticals such as healthcare, public sector, insurance and Huntington’s National Settlements business,” Scott Kleinman, co-president of Huntington Commercial Banking, said in the release. “Huntington ChoicePay technology enhances our commitment to delivering differentiated, automated experiences through best-in-class digital tools, and it aligns extremely well with our digital innovation roadmap.”
A timeline for the acquisition to close and the new technology to roll out to Huntington customers was not immediately clear.
“This payment solution will increase engagement with our business and commercial clients because of its ability to rapidly distribute payments to end consumers who are increasingly seeking a faster and broader range of payments options — all critical drivers of customer satisfaction,” Kleinman added in the release.
Huntington, earlier this year, announced a proposed acquisition of Capstone Partners, an advisory firm serving middle-market companies.
As banks like Huntington have sought to modernize some of their digital offerings, fintech companies like Torana have become fairly hot commodities.
An S&P Global report last year, however, noted that most deals have been relatively small, rarely requiring the large banks to disclose an acquisition price, such as with the Huntington deal announced this week.
“It’s hard for banks to absorb a large fintech company with a disruptive approach that contrasts with traditional banking models,” the S&P report says. “Meanwhile, fintech companies woo customers with lower fees than banks. That poses challenges to banks’ existing business lines if they want to acquire those fintech competitors, leading most banks to stick to small fintech deals.”
Steve McLaughlin, founder and CEO of investment bank Financial Technology Partners LP, said in the S&P report: “These (fintech) institutions that are coming up from the bottom are going after the highest fee business of the banks. So the banks don’t want to cannibalize themselves.”
Still, there’s been no shortage of consolidation in the fintech space, as reported earlier this year by American Banker, citing data from McLaughlin’s investment banking firm.
Announced acquisitions of fintech companies last year totaled $348.5 billion, according to the report. Moreover, U.S. fintech companies doubled their venture capital hauls in 2021 over the previous year, hitting $50 billion in VC funding.
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