The Silicon Valley Bank collapse promises a lot of changes to come in governing banking operations. It is also driving more interest in fintech M&A. This was the case with GTCR’s investment this month in R&T Deposit Solutions. We spoke to Managing Director Mike Hollander about the deal.
“We have been tracking this industry for some time, understanding how important deposit and liquidity management can be for banks which are also continuously looking for digital and tech-enabled solutions to help them manage,” Hollander says. “It has become evident, following the banking crisis this past spring, that the solutions that a business like R&T offer can help banks move faster, manage risk and liquidity appropriately and provide a partner to help service areas like treasury which have gotten increasingly complex.”
New York-based R&T, founded in 1974, offers banks, credit unions and wealth management firms tech-enabled liquidity management, deposit funding and securities-based lending programs. One of the company’s software programs helps banks and other financial institutions manage balance sheets so they can better control their daily liquidity needs.
Hollander says GTCR sees banks looking more frequently at what options they have to better manage deposits, whether its around delivery model, process or management services. He sees this industry growing and anticipates a “healthy flow of capital and investment.”
Following SVB’s collapse, it is not only critical for banks to have a line of sight into deposits but also know how to properly manage inflows and outflows, he adds. “Having a tech-enabled network service that can provide real-time solutions for this area of a bank can mitigate risk and reduce complexity,” he adds.
Dealmakers are optimistic about fintech M&A going into 2024. Buyer and seller valuations are expected to come in line, and banks will make more investments to improve their day-to-day operations.
“We are focused on how we can improve R&T and continue to grow this business. We do believe a core element of that will be strategic M&A,” Hollander says.