Page 104 - Forbes - USA (November 2019)

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FOMO
Tim Spence, Fifth Third’s chief strategist, in the regional bank’s downtown Cincinnati headquarters. Most of his neobank competitors are losing money, but
“the lesson . . . learned from Facebook and Amazon and Google . . . is that the internet is amenable to a winner-take-all market structure.”

investing in fintechs and funding loans generated by the shown that they can take over primary banking,” he says.
newcomers. Fifth Third has a broad deal with Morris’ QED, He also argues that having physical retail branches is still
which gives it a chance to invest in the startups the VC firm important for building long-term relationships with custom-
backs. One of Fifth Third’s earliest QED investments was ers. In a recent Javelin survey of 11,500 consumers, an equal
in GreenSky, the Atlanta-based fintech that generates home number rated online capabilities and branch convenience as
remodeling loans (some funded by Fifth Third) through a the most important factors when deciding whether to stick
network of general contractors. with a bank.
The best of these partnerships provide Fifth Third ac- Fifth Third has been reducing its overall number of
cess to younger borrowers, particularly those with high branches an average of 3% a year, but it’s opening new ones
incomes. In 2018, it led a $50 million investment in New designed to be Millennial-friendly. These outlets are just two
York-based CommonBond, which offers student-loan refi- thirds the size of traditional branches. Instead of snaking
nancing to graduates at competitive interest rates. Similarly, teller lines, there are service bars and meeting areas with
Fifth Third has invested in two San Francisco-based start- couches. Bankers armed with tablets greet customers at the
ups: Lendeavor, an online platform that makes big loans to door—Apple Store-style.
young dentists opening new private practices, and ApplePie That raises the question of whether any of the neobanks
Capital, which lends money to fast-food franchisees. will be so successful that they’ll eventually open physical
“The thing I’m most envious of, when it comes to the ven- outposts, the way internet retailers Warby Parker, Casper
ture-backed startups that we compete with, is the quality of and, of course, Amazon have done. After all, it’s happened
talent they’re able to bring in. It’s really remarkable,” Spence before. Capital One pioneered the use of big data to sell
says. credit cards in the early 1990s, making it one of the first suc- FRANCO VOGT FOR FORBES
But while Spence envies them sometimes and partners cessful fintechs. But in 2005 it started acquiring traditional
where he can, he isn’t convinced the neobanks will make banks, and today it’s the nation’s tenth-largest bank, with
big inroads into traditional banks’ turf. “None of them have $379 billion in assets and 480 branches.

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