Ally Bank has confirmed the completion of its acquisition of Health Credit Services, a Charlotte-based tech company that partners with medical providers to offer patients financing for products and services that aren’t covered by insurance. The bank acquired the company for $190 million, according to Ally.
The move is of two-fold importance for digital-only Ally: it helps the bank expand into the healthcare financing sphere, and it allows it to use HCS’ technology to offer point-of-sale financing in other areas. “The HCS acquisition is another step in the diversification and growth journey of Ally,” said Dinesh Chopra, chief strategy officer. “There are a lot of structural tailwinds that are going to continue to propel point-of-sale lending because the economy is getting digitized. Customers have a desire to bifurcate their spend.”
The point-of-sale lending market is a big opportunity, worth about $130 billion and growing about 18% to 20% per year, according to Chopra. For Ally, it’s an area in which it can scale up easily because it can grow its point-of-sale footprint through partnerships with other brands, he explained. “[Point-of-sale lending] is essentially a digital payment of the future because it gives [consumers] complete transactional-level flexibility,” he recently told Bank Innovation.
Ally’s move into point-of-sale lending is part of a broader strategy to diversify its offerings beyond checking accounts. It builds on its acquisition of robo-adviser TradeKing for $275 million in 2016 and its partnership with fintech startup Better.com in April to develop Ally’s digital mortgage platform (Ally also invested $20 million in Better.com). HCS’s 85 employees, whose skill sets include technology, operations and marketing, will move over to Ally.
“We felt [HCS] had built a really good business in a short period of time,” Chopra said. “It provides us a digital platform and the capability by which we can originate point-of-sale lending solutions. [HCS] currently is in the medical vertical, but we envision expanding it broader than that.”
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