Fifth Third CEO sees no need for digital-only bank

Don’t expect to see Fifth Third Bancorp launch a digital bank as part of its deposit-gathering strategy anytime soon.

The Cincinnati bank “could do that today” if it wanted to, but Chairman, President and CEO Greg Carmichael said Wednesday that it intends to capture new depositors by sticking to its plan of selectively expanding into fast-growing Southeastern markets.

“We’re a relationship bank. When you go outside of footprint, you have to be competitive to offer one of the top three rates,” he said at the Morgan Stanley Financial Services Conference in New York. “That’s hot money, and it’s going to move as soon as the rate environment changes, and it’s not relationship-based.”

Fierce competition for deposits, including from online-only banks such as Ally Bank and Synchrony Bank, has spurred some large and regional banks to introduce their own direct-to-consumer offerings to accelerate their deposit-gathering. Citizens Financial Group in Providence, R.I., for example, has added at least $4.6 billion in new deposits through its own digital bank, Citizens Access, since launching it just under a year ago. Goldman Sachs and MUFG Union Bank have also established online-only banks.

JPMorgan Chase also rolled out its own digital bank, dubbed Finn, but recently announced that it would drop the stand-alone brand and shift those customers to the Chase mobile app.

Carmichael said that Fifth Third is comfortable with its current strategy, noting that it is outpacing its peers in deposit growth. Total deposits increased to $109.6 billion in the first quarter, up 6% from the same period a year earlier.

He highlighted a number of other strategic priorities for the $167.8 billion-asset Fifth Third, too. Fifth Third has already converted the retail platform of the Chicago-based MB Financial, which it acquired last year, and is now focused on doing the same for its commercial platform. He also said that Fifth Third is interested in nonbank acquisitions that could boost its fee income, similar to its purchase last year of Coker Capital Advisors, an M&A advisory shop focused on health care businesses.

Carmichael hinted at a potential slowdown in demand for commercial loans, largely due to ongoing trade tensions between the U.S. and other nations.

“Commercial clients continue to express concerns about both current and potentially more punitive future tariffs,” he said. “As a result, our commercial clients’ expansion plans are less optimistic and more uncertain compared to just a couple months ago.”