Fifth third buy healthcare commercial payments fintech

Fifth Third Bancorp has agreed to buy Big Data Healthcare, a fintech whose software streamlines healthcare data flowing to and from providers.

The move comes as many the banks are increasing their investments in the healthcare system financial services, with healthcare spending on track to reach $6 trillion by 2027, according to estimates.

Fifth Third’s decision to buy Big Data Healthcare fits into the bank’s plan to build 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 that area for the foreseeable future, Spence said.

“Our goal is to provide a managed service for each of our focused commercial verticals,” said Spence, noting that Big Data Healthcare’s tools replace a cumbersome, highly manual process with software. The deal will help position Fifth Third to expand its treasury management relationships with commercial clients across the health care industry, 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 healthcare sector is the largest and fastest growing of Fifth Third’s commercial payments verticals, Kevin Lavender, Fifth Third’s head of commercial banking, said in a press release Wednesday.

Fifth Third’s acquisition fits into a trend of specialists teaming up with banks to improve healthcare payment processing because as the sector expands, it has exposed many gaps and inefficiencies in surrounding payment technology and billing processes, said Steve Murphy, director of commercial payments at Javelin Strategy & Research.
“Healthcare is a big business, and with the aging of the Baby Boomers over the next 10 years, it will continue to generate a lot 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 pleased to have found a partner who recognizes common goals and desires to support and grow existing and new businesses through our innovative healthcare services,” David Plotkowski, CEO and co-founder of Big Data Healthcare, said in the release.