Huntington National Bank has joined the ranks of conventional banks buying fintech companies.
The Columbus, Ohio-based bank, which has a significant presence in Detroit and throughout Michigan, announced Thursday that it has 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 press release.
“The acquisition of Torana aligns with our corporate payments strategy of serving customers in businesses of all sizes and allows us to maintain a leadership position within our commercial banking segment and further develop our business. scale in verticals such as healthcare, public sector, insurance and the Huntington National Institutions business,” Scott Kleinman, co-chairman of Huntington Commercial Banking, said in the release. “The Huntington ChoicePay technology reinforces our commitment to delivering differentiated and automated experiences through best-in-class digital tools, and it aligns extremely well with our digital innovation roadmap.
A timeline for the closing of the acquisition and the new technology to be rolled out to Huntington’s customers was not immediately clear.
“This payment solution will increase engagement with our businesses and commercial customers due to its ability to quickly distribute payments to end consumers who are increasingly looking for a faster and wider range of payment options – all critical drivers of customer satisfaction,” Kleinman added in the statement. .
Huntington earlier this year announced plans to acquire Capstone Partners, an advisory firm serving middle-market businesses.
As banks like Huntington have sought to modernize some of their digital offerings, fintech companies like Torana have become quite sought-after commodities.
A report by S&P Global last year, however, noted that most deals were relatively small, rarely requiring big banks to disclose an acquisition price, as with the Huntington deal announced this week.
“It is difficult for banks to absorb a large fintech company with a disruptive approach that contrasts with traditional banking models,” said the S&P report said. “Meanwhile, fintech companies are enticing customers with lower fees than banks. This poses challenges for banks’ existing business lines if they wish to acquire these fintech competitors, leading most banks to stick to small fintech transactions.”
Steve McLaughlin, founder and CEO of investment bank Financial Technology Partners LP, said in the S&P report: “These (fintech) institutions that come from the bottom are attacking the highest paying businesses of banks. don’t. want to cannibalize themselves.”
Still, there has been no shortage of consolidation in the fintech space, as reported earlier this year by American Banker, citing data from McLaughlin’s investment bank.
Announced acquisitions of fintech companies last year totaled $348.5 billion, according to the report. Additionally, US fintech companies doubled their venture capital inflows in 2021 compared to the previous year, reaching $50 billion in venture capital funding.