Banking Makes Progress With FinTech Merger Moves
Published on November 17, 2021
By Thomas Butler
The world of finance and banking is evolving, with many new words and phrases being used in our daily lexicon: cryptocurrency, fin-tech, altcoins, blockchain, NFT’s, many of which would have not been understood just a decade ago. The creation of all these new means of currency and trade will clearly keep the global finance sector and those who serve in it ahead of the times. It is the successful innovators that will lead.
Only about a week ago New York City’s Mayor-Elect Eric Adams suggested that the metropolis he leads, intends to be a digital finance-business capital and suggested he would take his first few paychecks as the City’s CEO, in Bitcoin.
This is far from the days of bank passbooks!
Back in the day, a student and their family could deposit cash, be that $2 or $5 a week into an account and the following week the passbook would be returned to start the cycle all over again. Kids would learn about the discipline of savings and principles of growth through compound interest. Of course, this was back at a time when interest rates were much higher than today.
Getting back to the future… the new hot thing is challenger banks.
This week, Butler Associates was involved with announcing the creation of America’s largest challenger bank, in a merger between a corporate fin-tech and federally chartered, publicly traded bank. The news got tremendous pick up and the exceptionally positive reaction among financial investors, propelling the bank’s stock.
Just what is a challenger bank? Challenger banks are digitally savvy disruptors of the finance sector, without all that brick and mortar. They are built around first in class technology that empowers mobile banking today, enabling customers to use their smartphones to open accounts, make deposits, transfer funds or even to take out a loan for a car or a home.
American Banker writer John Reosti explained the deal: “An aspiring challenger bank that had been pursuing a de novo charter has shifted gears, agreeing to sell itself to a Connecticut community bank. Patriot National Bancorp plans to pay $119 million in cash and stock for American Challenger Development Corp., which has been working for two years to become a digital-first national bank.”
That day American Challenger announced a separate $1.75 billion deal related to advancing residential solar sector loans, plus upon the formal closing of the merger, investors are expected to inject nearly a billion dollars in new capital to grow the entity even more substantially.
The bottom line is the banking sector has evolved from traditional passbooks to make extreme progress as demonstrated by the Patriot/Challenger deal.
The truth is challenges come with change. The introduction of fast-paced innovation to any deliberate-paced industry requires constant communications to succeed after enduring the test of time.
Butler Associates is proud of its role in helping clients, especially Patriot, transform ideas into action.
Ready to mobilize success?
Contact Butler Associates as a partner to accelerate innovation and bring actionable communications ideas to market.