Fifth Third Bancorp is expanding business management services into the technology sector with the recent acquisition of the embedded payments platform Rize Money.
The Cincinnati, Ohio, bank was drawn to the acquisition due to Rize Money's "ease of accessibility," according to Bridgit Chayt, Fifth Third's head of wholesale payments.
The platform launched in 2014 to assist fintechs, financial institutions and other companies service a wide range of payments including ACH, wire transactions and real-time payments from a single application program interface (API).
Rize Money, based in Arlington, Virginia, has built a "payments infrastructure" and added risk management features that will play a prominent role in the expansion of Fifth Third's treasury management business, Chayt said in an interview.
Client demand for faster payment services has risen as companies move larger portions of their business online, with
At the same time, banks are reconsidering operational improvements amid a worsening economy by
Fifth Third has prioritized investments in treasury management services in recent years after reporting decreases in private client service fees.
The $209 billion-asset bank has seen wealth and asset management revenue decline from from $143 million in the first quarter of 2021 to $53 million during the same period this year, even as that business group's portion of overall net income has increased.
Fifth Third reported $20 million in net income from wealth and asset management during the first quarter of 2021, compared to $74 million during the same period this year.
"More and more companies find themselves to be a payments company in some way, shape or form," Chayt said. "Working capital management will always be relevant, and we continue to find ways to improve on what we provide in that realm."
A processing rail that's always turned on can potentially help a credit union that's multiple time zones away from partners, or a community bank looking to automate payroll.
The "embedded finance ecosystem" presents an opening for banks to expand payments and cash management services to clients as well as third-party companies, according to Colin Kerr, a certified treasury professional at the financial services research firm Celent, which is a subsidiary of the consulting group Oliver Wyman.
"Banks can offer embedded payments directly into clients and third-party business workflows" by simplifying connectivity through partnerships with fintechs like Rize Money, Kerr wrote in an email. The opportunity provides banks "flexible payment capabilities right at the point of need."
But Kerr added that banks still bear risks concerning fraudulent transactions, which have been on the rise in recent years amid an increase in digital banking.
"It is essential that end-to-end risk is overseen by the bank," Kerr wrote. "The operating models should implement compliance and fraud detection as early in the process as possible."
