The Intersection of Financial Institutions and Technology Leaders

What Getting Bought by a Bank Has Meant for 1 Fintech

January 16, 2025

By Kiah Lau Haslett

 

Banks and financial technology firms talk a lot about partnerships, but rarely about deals. They don’t happen very often: There were only 94 fintech acquisitions from 2013-23 by the top 50 US banks and the top 15 Canadian and international banks, only 1% of global fintech deals, according to a study by consulting firm OliverWyman.

One of those deals was in 2019 when Cleveland-based KeyBank acquired the technology of Laurel Road, a fintech focused on the financial needs of professional degree holders, especially those in the healthcare industry. The acquisition of the now-$189.8 billion bank gave Laurel Road a bigger balance sheet and corporate support that allows the fintech, which still operates as a standalone entity, to create products that address its niche customer base. 

In fact, Diana Welch Howell, the firm’s head of healthcare partnerships and strategy, says the acquisition has been “a great marriage” in a Reinventing Banking conversation with FinXTech’s Kiah Lau Haslett. She talks about what the fintech brings to the marriage and what the bank does, how the fintech approaches technology development and who handles marketing and business development. 

Laurel Road was founded in 2013 on the premise it could use technology and data to offer competitive rates for student loan refinancing and other consumer financial products. This demographic can be difficult to serve because students often carry high debt loads for years. Their debt-to-income, or DTI, ratios can make borrowers appear to be short-term credit risks for financial institutions. 

In addition to competitive student loan refinancing, Laurel Road offers a suite of products geared towards helping these borrowers understand their student loan repayment options, save money, buy homes and grow their wealth. They also partner with medical and professional associations and hospitals to find new customers.

Welch Howell says the focus on serving this unique customer base when they need assistance the most creates a lot of loyalty among its customers, who are sometimes called “HENRYs” for “high earners, not rich yet.” The fintech will send a congratulatory note when someone pays off a debt, for example. That’s crucial since medical professionals are often sought-after bank customers once they progress in their careers. 

For us, what has been helpful in differentiating is … having a niche … being able to credibly be there for those folks when they truly are in the beginning of their financial life,” she says.

Kiah Lau Haslett is the Banking & Fintech Editor for Bank Director. Kiah is responsible for editing web content and works with other members of the editorial team to produce articles featured online and published in the magazine. Her areas of focus include bank accounting policy, operations, strategy, and trends in mergers and acquisitions.