For banks, these all-or-nothing obligations present a sizable barrier to entry, limiting their ability to fully participate in growth opportunities presented by fintechs. And for community banks with relatively lower asset volume, the balance sheet risk associated with onboarding multiple fintechs can be too high to even consider market entry.
Expanding fintech product requirements have added additional barriers to entry for sponsor banks to participate in the fintech market opportunity. It takes more time to build the right infrastructure to manage and mitigate risks arising out of multiple fintech services across multiple products and companies.
Through Modular Banking, it’s no longer all-or-nothing. Sponsor banks can choose to specialize in a selected set of offerings, such as ACH processing, FedWire processing or Card issuance, at levels that are within their risk tolerance.
Lowers barriers to entry into fintech-served markets.
Limits regulatory risks and compliance burden to only selected offerings.
Allows for capping of regulatory risk and compliance burden within risk tolerance levels.
Shares compliance burden with a licensed and regulated BaaS platform provider.
Simplifies ongoing risk management and compliance obligations supporting fintech operations.
Boosts ROI of fintech market operations, providing market access at low marginal operational cost and complexity.
Synapse Brokerage LLC is a registered broker-dealer and member of FINRA and SIPC. As a result, Synapse can participate directly in the flow-of-funds and thereby, segment and distribute core services across multiple sponsor banks, yet deliver these services as unified solutions to its customer fintechs and their end-users.
In addition, through our lending entity, Synapse Credit LLC, we are able to underwrite and originate loans for individuals and businesses in designated states without needing a sponsor bank. This approach enables us to build a much more modern stack for our fintech customers as well.