While its deal to merge with Webster Financial is being finalized, the $29.9 billion-asset Sterling Bancorp has been far from idle.
The Pearl River, New York-based company has made a series of recent moves with fintech companies big and small that are aimed at broadening its reach. The latest deal, announced this week, is a capital investment in Finitive, a digital private credit marketplace that links business borrowers with institutional investors and lenders.
Sterling, a bank with about 90% of its loan portfolio tied to the commercial lending business, is expecting a leg up in the multi-trillion-dollar market for private debt. Finitive helps participating banks source deals and conduct due diligence, streamlining what can be a “fairly clunky process,” Sterling Chief Financial Officer Beatrice Ordonez said in an interview.
“We see an opportunity for loan growth through that pipeline, and over time we could find more ways to work together,” Ordonez said.
So far this year, Sterling has announced a deal with Google to provide checking and savings accounts through the search giant’s digital wallet, and has also reached “banking as a service” agreements with the technology providers Rho Technologies and Bright Fi.
While much has been made of the competition between traditional banks and fintechs, Sterling is looking to collaborate with companies that are developing innovative products adjacent to Sterling’s business, Ordonez said.
The deal with the $33 billion-asset Webster, which was
“We’re not looking to put investment dollars in some tech space we don’t understand,” Ordonez said about the recent fintech deals. “It’s really about building our tech expertise, building our reach, building our knowledge base in these innovative technology sectors.”
The terms of the deal with Finitive were not disclosed, but a press release described Sterling as both an investor and a strategic partner in the New York-based fintech. The agreement is one of several that Finitive has reached with banks looking for a smoother way to reach potential new business borrowers.
Finitive's users include banks and nonbanks that are looking for capital sources to fund their loans for students, online borrowers and commercial real estate projects.
Finitive has facilitated over $3 billion in capital commitments on its platform over the past three years, and the number of users has tripled, CEO and founder Jon Barlow said in an interview. “The transaction volume will increase significantly over the next couple of years,” he predicted.
Investors in private debt deals today are less likely to conduct due diligence by visiting the physical locations of the borrowers’ businesses, which was a standard step before the pandemic, Barlow said.
Digitizing more of the process figures to give a boost to participating banks. In the near term, it could also help Sterling find loan growth after its portfolio declined by about 2% year over year to roughly $21.1 billion as of March 31.
The deal with Finitive won’t be Sterling’s last move in fintech, according to Ordonez. “We have some similar investments to announce in the coming months as we look for innovative companies in our space,” she said.
