Not all BaaS partnerships are created equal - Guest article from Plinqit

Not all fintech and bank partnerships — especially banking-as-a-service ones — are created equal. This was made

clear by the recent Synapse failure and bankruptcy, which has left many of the fintech’s customers unable to access their savings. 

As an advocate for educating consumers about healthy financial behaviors and the importance of saving, I’m struck by the fallout. And as a fintech founder and former bank leader, I think it’s unfortunate to see another company fail. However, the fact that this failure has the potential to tarnish partner banking and BaaS business models in the eyes of the public — as well as regulators — means it needs to be addressed.

The crisis could cause a pendulum swing, causing regulators to overcorrect on a failure that should not have happened. Companies that are doing things the right way and genuinely focused on improving financial services and access to banking products should not be penalized. We cannot allow a few bad actors to cause panic. Many fintech and banking partnerships contribute to innovation, leading to greater financial inclusivity, which is possible to accomplish compliantly and sustainably. 

Lessons learned (so far) 

There is a vast difference between a BaaS “sponsor” bank and a fintech/bank partnership, and right now they are being lumped together. Fintech and bank partnerships have occurred since the beginning of bank technology.  

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