KeyBank announced Monday it has acquired Philadelphia-based GradFin, a fintech that advises borrowers on repayment of student loan debt.
Financial terms of the deal, which closed May 2, were not disclosed.
KeyBank, in recent years, has forged a growth strategy that emphasizes niche mergers and acquisitions — and the GradFin purchase dovetails with another recent KeyBank takeover and buildout.
The $181 billion-asset Cleveland-based lender bought student loan refinancing startup Laurel Road in 2019, then tailored the platform to healthcare professionals. Laurel Road for Doctors, launched last year, offers a credit card with 2% cash back to pay down student loans, discounts for bundling savings accounts with student loan refinancing, and a financial insights feature.
"Laurel Road is thrilled to deepen our partnership with GradFin and bring the value of [public service loan forgiveness] counseling to nurses and other members with the need," Alyssa Schaefer, Laurel Road’s general manager and chief experience officer, told Crain’s Cleveland. "We have a unique opportunity to blend GradFin's unmatched knowledge in PSLF with our understanding of the financial journey of healthcare professionals.”
GradFin lists 32 employees on its website’s “team” page. KeyBank said it is not disclosing how many of those workers will stay on with the bank after the deal. However, Chris Walters, GradFin’s CEO, will continue to lead the team, according to a press release.
"We're excited to become part of the Key team because of their exceptional track record in acquiring and growing fintech companies," Walters said. "We could not have asked for a better partner to help us launch into our next phase, continuing on our mission of bringing our loan education programs and market aggregation to financial advisors and their clients.”
GradFin will continue to work primarily out of Philadelphia and Boston and retain its name through a transition period, Crain’s reported.
GradFin’s emphasis on student loan forgiveness enters KeyBank’s fold at an opportune time. President Joe Biden is reportedly weighing how exactly to follow through on a 2020 campaign promise to forgive up to $10,000 in student debt per borrower, including setting an income cap for eligibility to the program.
KeyBank, meanwhile, said in Monday's press release the GradFin acquisition represents a "next step in providing digital innovation at scale.”
"GradFin combines the best of digital and human interaction to create a unique client experience," said Jamie Warder, KeyBank’s head of digital banking. "Advisors thoroughly understand the economic environment as well as the specific needs of healthcare providers, while the digital platform provides fast and effective solutions for debt relief and government forgiveness programs. This approach perfectly fits Key's commitment to seamless client interactions and provides for a best-in-class experience.”
The GradFin deal marks KeyBank’s first acquisition since it bought payments startup XUP in November. That move was meant to streamline the bank’s merchant payments business through deeper embedded banking.
KeyBank’s CEO, Chris Gorman, told investors in March the bank was eyeing “targeted investments, investments in teammates, investments in digital, investments in analytics and the acquisition of niche businesses,” according to American Banker.