KeyCorp has bought a fintech company that helps borrowers manage their student loans — the latest move by its strategy to stimulate growth by investing in niche digital businesses.
The acquired company, GradFin, offers high-level counseling services to people seeking help with their student debt. Financial terms of the agreement, reached on May 2, were not disclosed.
“GradFin has combined the best of digital and human interaction to create a unique customer experience,” Jamie Warder, chief digital officer at KeyCorp, said in a Monday press release announcing the deal.
The acquisition comes two months after KeyCorp CEO Chris Gorman told investors that further growth for KeyBank’s parent company will come from “targeted investments, investments in teammates, investments in digital , investments in analysis and the acquisition of niche companies”.
Recent examples of such investments include acquisition last fall of XUP, a software developer that builds digital infrastructure for business-to-business payments, and its March 2021 purchase of AQN Strategies, a data and analytics startup.
In 2019, the $181.2 billion asset bank acquired student loan refinancing platform Laurel Road, which Cleveland-based Key has since grown into a full-fledged digital bank for doctors. and dentists.
GradFin, which is based in Philadelphia, provides access to financial advisors who help borrowers reduce student debt through repayment, consolidation and refinancing. The 7-year-old company also helps borrowers with utility loan forgiveness programs.
GradFin CEO Chris Walters will continue to oversee the fintech team after the acquisition, KeyCorp said in the press release. That team includes debt counsellors, public loan forgiveness specialists and business development personnel, a KeyCorp spokesperson said in an email.
The acquisition comes amid growing expectations that the Biden administration will soon announce large-scale federal student loan debt forgiveness. President Biden pledged during the 2020 campaign to forgive up to $10,000 in student debt per borrower.