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Fifth Third this week entered a partnership with Trustly, a technology firm that powers open banking, using permissioned data sharing to enable customers to access multiple products through their bank account. The bank will combine Trustly's technology with tools from Newline by Fifth Third.
Fifth Third is competing against payment fintechs and other banks that are combining new payment processing technology and data analysis methods to sell a broad range of services to clients that includes not only payments, but one-stop access to other financial services and nonfinancial business products. "We see a bunch of new opportunities to add more support and richer information around the movement of money," said Tom Bianco, general manager of Newline by Fifth Third. "As we mine that data it will continuously get better."
Rize, a firm Fifth Third acquired in 2023, helped fintechs, banks and other clients support digital payments, including real-time processing, through an application programming interface. Rize's technology contributed to Newline, a Fifth Third product that enables companies to launch payment, card and deposit products directly with Fifth Third. "To drive operational efficiency you have to be able to curate data and be ready with information about what's going on on all sides of the transaction," Bianco said.
Trustly and Newline will build products that use the Clearing House's RTP network and Trustly's pay-by-bank system. Real-time payments are expanding rapidly, while pay-by-bank is emerging as a lower-fee alternative to credit card payments. The first product will be support for deposits and withdrawals via RTP, though Fifth Third anticipates further development for products that use the RTP and FedNow rails.
"We're just scratching the surface of what new payment networks like FedNow and RTP can do," Bianco said, adding the Trustly partnership can expand usage of requests for payment, or the combination of invoice delivery with the RTP network to match payments to available funds as a way to mitigate overdrafts. "If you look at the payment chain and all of the information about the transaction that is now available, there are added pockets of value that can keep the innovation train rolling."
Fifth Third's Trustly collaboration comes as banks feel pressure to support faster payment methods, including RTP and FedNow, which is starting to become an expectation among consumers, according to Patricia Partelow, a managing director at EY Financial Services Consulting. As consumers adopt these payment methods, there is a corresponding appetite for consumer-oriented payment options among business users. That creates competition among banks to reach business clients as corporate treasury departments seek to improve visibility into cash positions, Partelow said.
Besides the competitiveness of new payment technology, regulatory risk is also creating a trend toward payment fintechs to seek partnerships with banks to improve compliance. The
"As one of the largest banks it's obviously something we're taking seriously … to ensure all products that are on the platform are aligned with regulations," Bianco said.
These pending rules mandate that banks share data with third parties such as fintechs at the consumer's request. This data includes payment amounts, type, fees, balances and other information, with a storage requirement of at least two years.
"1033 will move us from the wild west of data where people were getting data however they could to give the market structure and calm it down," said Eric Foust, vice president of banking partnerships at Trustly. "It will give merchants and consumers confidence in the market."
Due to more stringent compliance needs, many payment fintechs are moving to larger and more stable banks like Fifth Third for their bank partnerships, according to Tony DeSanctis, senior director at Cornerstone.
"The issues around compliance, Bank Secrecy Act and regulatory pressure has led fintechs to seek partnerships with larger institutions," DeSanctis said. "In addition to the regulatory considerations, larger banks have tools like real-time payments that enable fintechs to offer a more robust product suite."
