The round, which brings CommonBond's total funding raised to over $130 million, was joined by First Republic Bank and Columbia Seligman Investments as well as existing investors Neuberger Berman, August Capital, and Nyca Partners, former Citi CEO Vikram Pandit and ex-Thomson Reuters chief Tom Glocer.

CommonBond provides refinance loans for graduates, new loans for current students, and student loan benefits for employees through its CommonBond for Business platform. Since launching in 2011, the firm has funded over $1.5 billion in loans.

The New York-based outfit funds its loans via lines of credit from big banks and then sells them on to investors. So far, it has secured over $3 billion in lending capacity, and recently closed its first AAA-rated securitisation.

The latest funding, which will be invested in technology, is a sign of an evolving relationship between banks and the host of online lenders which have popped up in recent years. While, the upstarts initially positioned themselves as rivals, they are now taking a more collaborative approach. Fifth Third does not offer student loans and a relationship with CommonBond is seen as a way to attract and retain a new pipeline of young and profitable customers.

"At Fifth Third, we recognise that student debt is the number one challenge our millennial customers face," says Tim Spence, head, payments, strategy, and digital solutions, Fifth Third. "CommonBond has built an industry-leading digital proposition that delivers a memorable experience and helps its members save thousands on their student loans so they can finance their dreams."