Fifth Third buying health care commercial-payments fintech
Fifth Third Bancorp has agreed to purchase Big Data Healthcare, a fintech whose software streamlines health care payments coming to and from providers.
The move comes as many banks ramp up investments in health care financial services, with health care spending on track to hit $6 trillion by 2027, according to estimates.
Fifth Third’s decision to buy Big Data Healthcare fits into the bank’s plan to build up specialized treasury management services in key industry verticals, Timothy Spence, Fifth Third’s president and CEO, told analysts at an RBC investor conference in New York on Wednesday.
The Cincinnati bank’s total managed services ecosystem revenue was about $175 million last year and Fifth Third expects to see double-digit growth in this area in the foreseeable future, Spence said.
“Our goal is to offer a managed service for each of our focused commercial verticals,” Spence said, noting that Big Data Healthcare’s tools replace a cumbersome, highly manual process with software. The deal will help position Fifth Third expand its treasury management relationships with commercial customers across the health care space, Spence said.
Big Data Healthcare, founded in 2017 in Frisco, Texas, provides software that automatically reconciles remittances sent to hospitals and medical practices back to deposits. Fifth Third said the purchase is being made by an indirect, wholly-owned subsidiary; it did not provide financial terms or a timeline for the closing.
“We added a deeply experienced team and a well-engineered, scalable product through this transaction,” Spence said.
The heath care sector is the largest and fastest-growing of Fifth Third’s commercial-payments verticals, said Kevin Lavender, Fifth Third’s head of commercial banking, in a press release Wednesday.
Fifth Third’s acquisition fits into a trend where specialists are teaming with banks to improve health care payment processing because as the sector expands, it’s exposed many gaps and inefficiencies in surrounding payments technology and billing processes, said Steve Murphy, director of commercial payments at Javelin Strategy & Research.
“Health care is a big business and with Baby Boomers aging over the next 10 years, it will continue to generate lots of transactions,” he said.
The move also gives Big Data an injection of capital, an urgent requirement for fintechs to expand their capabilities, Murphy said.
“We are delighted to have found a partner that acknowledges common goals and desires to support and grow existing and new business through our innovative healthcare solutions,” said David Plotkowski, CEO and co-founder of Big Data Healthcare, in the release.
