The news: Fifth Third wants to compete for startup banking with its new Innovation Banking offering, which it built to evolve with startups across their lifecycles, per a press release. 

This solution includes liquidity and operating solutions and then expands into financing, capital markets, and wealth management as those companies grow. 

Fifth Third estimates the business represents a $10 billion multiyear deposit growth opportunity.

Why it matters: Silicon Valley Bank demonstrated the power of becoming deeply embedded in the startup ecosystem. At the time of its 2023 collapse, its roughly 40,000 customers included about half of US startups, per Wired. Its collapse sent some startups looking for accounts elsewhere.

Fifth Third is trying to fast-track the relationship-building process in the startup market by leaning into its acquisition of Comerica, which gave the bank branches in Silicon Valley. Fifth Third says it plans to combine Comerica’s startup and venture capital expertise with its proprietary payments technology and broader commercial banking capabilities.

Implications for banks: Comerica gives Fifth Third some relationships in the startup banking market, which is difficult to break into. Even JPMorganChase faced challenges winning Silicon Valley clients after acquiring First Republic and hiring former SVB talent: Many startups were accustomed to specialized service and technology, luxury events, and bankers with deep ties to the venture ecosystem. 

That makes Fifth Third’s “$10 billion deposit opportunity” in this market ambitious. Its biggest near-term opportunity will likely come from getting more out of the relationships Comerica already built, rather than taking customers from entrenched rivals. As those startups grow, Fifth Third can introduce services that may not have been available to them through Comerica. That gives Fifth Third a path to capture more of each client’s financial relationship even if its ability to win share from other established providers proves limited. 

But just as JPMorganChase had to, it will need to prove its value even to the startups it acquired from Comerica. Fifth Third still needs to show clients that the larger organization adds capabilities without sacrificing the specialized service that made those relationships valuable in the first place.

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