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Regional lenders have been struggling to attract the next generation of banking consumers to fill the gap that will be left by an aging baby boomer population. As a result, traditional financial institutions have been rushing to acquire or invest in fintech companies to reach the student loan market. In 2017, the education finance start-up Earnest was purchased by Navient, a federal loan servicer and provider of asset management and business processing solutions, for $155 million. A subsidiary of Fifth Third Bancorp jumped into the fray in 2018, leading a $50 million financing round for student lender CommonBond. And, earlier this year, Key Bank acquired the digital student lending business of Laurel Road Bank for an undisclosed sum.

While originating and refinancing student loans is an attractive business in and of itself, these institutions have bigger aspirations in mind when cutting deals with online student lenders: Using student lending as a platform to build long-term relationships with millennial consumers.  Key Bank made this rationale crystal clear in its Form 10-Q for the quarter that ended March 31, 2019: “The acquisition of Laurel Road allows us to expand national, digital-only lending capabilities, boost our client experience through compelling digital tools and deliver a holistic banking experience to a targeted segment of consumers.”

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