The article discusses the impact of Synapse, a failed fintech startup, on the banking-as-a-service (BaaS) industry. Synapse raised $150 million in funding before shutting down due to operational and compliance issues. The company’s failure has led to increased scrutiny of BaaS providers and neobanks that rely on them.
Some key points from the article include:
- The FDIC is concerned about Choice Bank’s relationship with Mercury, a digital banking startup.
- Kruze Consulting’s Healy Jones believes that regulatory clarity for consumer protection is needed.
- Gartner analyst Agustin Rubini says that fintech companies must maintain high operational and compliance standards to avoid failures like Synapse.
- The article suggests that the Synapse debacle may lead banks to be more hesitant to work with BaaS providers, opting instead for direct relationships.
The article concludes by stating that the failure of Synapse will likely impact future prospects for fintech fundraising, especially for banking-as-a-service companies.