EXCLUSIVE: “Time to Step Up!” – Tom Bianco, Newline by Fifth Third in ‘The Fintech Magazine’

With a storied history of payment innovation, Ohio-based Fifth Third Bank believes it’s providing a blueprint for others to follow with its embedded payments business – Newline

Fifth Third Bank is an old hand at trailblazing. As far back as 1971, it created Fifth Third Processing Solutions as a payments network to help connect retailers and financial institutions. It was later renamed Vantiv and then spun off and merged into Worldpay, the largest payment processor in the US.

That legacy was the foundation for a much more fundamental rethink of how banks should take part in the new financial ecosystem – not as followers of fintech, but as leaders.

“One of the things we believe at Fifth Third is, if you’re not interested in the future, the future is not interested in you,” says Tom Bianco, General Manager for Newline, the bank’s embedded payments platform. “Fifth Third, historically, has been an innovator in the payments landscape and in 2021, we decided to get ahead of where we thought the market was going and enable clients to put our software and our payment capabilities directly at the point of customer experience for their products, their brands, their value proposition.

“Newline is the focal point for all of that payments activity, which goes through the massive processing engines that we have at Fifth Third Bank today.

“With new technologies, new teams, and an innovation mindset, we work with some of the best companies in the industry and put pressure on each other to perform. It’s the best of Silicon Valley with the best of a large FI, and we feel that’s a unique combination in the market. It’s a bit of a different dynamic at Fifth Third.”

The drive to be a market leader led Fifth Third in 2023 to acquire Rize Money, which provides payment infrastructure and risk management capabilities to fintechs and other technology companies that want to offer innovative financial products through a single application programming interface (API). And Newline, Fifth Third’s embedded payments business, delivers a modern API-based payment processing platform and BIN Sponsorship solutions.

”Banks aren’t competing with other banks, from an experiential standpoint,” says Bianco. “We’re competing with the likes of Uber and Amazon – companies that have set a digital-first experience and a real-time expectation.

“Newline finds the leaders in the payments category – Stripe, Trustly, Brex, Rippling – and we put our capabilities, embedded and native, into their software to help meet their customers where they are with the capabilities that you’d expect from a traditional bank.

“It’s been a lot of fun to help build those products, deliver that value, and serve a client population that is national in nature when, as a bank, we don’t have a presence in all 50 states.”

So, by offering a way into bank-grade services (card issuing, payment processing, etc), Fifth Third is expanding its acquisition funnel, while also using its payments technology as an income generator. It’s picky about who it works with, however, targeting only the best and those with ambitions to scale. And it has two further golden rules: a strict policy to have a standardised regulatory and compliance oversight model for all its programmes to provide clarity; and a focus on ensuring that it not only has an understanding of each fintech it decides to work with but a clear full-system view of all third parties involved.

The approach is certainly bearing fruit; Fifth Third’s commercial payments revenue saw 10 per cent growth in Q3 of 2024 compared to the same quarter in the previous year.

“Our clients sometimes have multiples of valuation. They’ve raised $2billion in venture capital,” says Bianco. “So our strategy is to find the best in the business and partner with them so we can do joint distribution, joint marketing, joint product development, and help accelerate both roadmaps.

“Putting our capabilities into our clients’ products helps augment our product development costs. There’s a symbiotic relationship when you think about it because we’re getting access to markets that we wouldn’t have without a physical presence, and they’re getting real-time payment and deposit experiences – capabilities that match the pace, precision and scale that clients demand.”

“One of the things we believe at Fifth Third is, if you’re not interested in the future, the future is not interested in you “

Tom Bianco, General Manager for Newline by Fifth Third

A prime example of Fifth Third’s cherry-picking approach is its tie-up with Swedish fintech Trustly, an open banking payments solutions specialist, for which it processes payments coming through the Automatic Clearing House ACH and real-time processing RTP networks and Trustly’s own pay-by-bank ecosystem.

Another example is its partnership with Stripe Treasury, which allows the company’s software platform clients to offer embedded finance products to their customers. It will be working with Newline to expand the embedded product suite available to customers on Stripe’s platform. From Bianco’s viewpoint, embedded finance is only just starting.

“Embedded payments, embedded banking, feels like the first pitch of the first early innings in a baseball game,” he explains. “We’re putting a lot of pressure on the payment networks to process payments as we look to grow new payment methods – FedNow, real-time payments, some of those 24-7, 365 mechanisms.”

Looking to the future of how payments infrastructures will develop in the States, he says: “I think you will see a convergence of the card networks, Visa, Mastercard, etc, and some of the more legacy, traditional payment processing systems like ACH and wire. Real-time payments and FedNow kind of bridge that gap, and, so for us, there’s just a massive amount of opportunity when you’ve got access to a bank account through a digital app and experience – rewards, refunds, credits.

“There’s just a lot of really interesting things that happen when you have a digital canvas and you’re operating in real time. So, we’ll continue to place a lot of emphasis on real-time experiences, real-time integrations, real-time information sharing, and that’ll put pressure on the broader payment ecosystem from a modernisation and processing standpoint.”

In October 2925, Fifth Third announced it had entered into a $10.9billion merger agreement with Comerica. The franchises will create the ninth largest bank in the US with $288billion in assets. But far from wanting to monopolise its position, Fifth Third advocates for more established and well-capitalised banks to step up and take an active role in this next phase of banking as a service (BaaS), with risk and compliance at the forefront.

There is a concern that if banks don’t make this transition, different layers in the embedded finance tech stack could continue to operate with a lack of coordination, each player optimising their slice of the pie, further disintermediating the client/bank relationship and creating a fragmented ecosystem – a fintech Wild West.

“We need more of those foundational banks to be able to provide real clarity, direction, and guidance into some of these new and existing large fintech platforms that need to possibly switch banking providers because of the tumult over the past of couple years,” says Bianco. “Our growth strategy is to help set the market.

This article was published in The Fintech Magazine Issue #37, Page 46-47