BaaS in Flux? Pivots, Exits, and the Regulatory Squeeze
Future of Fintech - Edition #115 (16th-22nd Apr)
Fintech Fix Alert! 🔊
Virtual cards are flaming hot, borders are becoming a blur, and banks seem to be ‘branching’ out to novel endeavours! This is just the launchpad; scroll through to see the Fintechaverse erupt with disruptions! 🚀
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What’s on the fintech menu today?
📖 Today’s Must Read: Synapse + TabaPay - From Chapter 11 to Chapter Next in Fintech
🌟 Fintech Fiesta: The Week's Hot 10!
🌐 ‘Byte’ Buzz: Fintech highlights, sorted by segment!
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Fin-teresting Stories in Fintech 📰
Synapse + TabaPay - From Chapter 11 to Chapter Next in Fintech
The plot thickens in the world of Banking-as-a-Service (BaaS). In the latest twist of events, Synapse, amidst a tumultuous journey with its sponsor bank Evolve under consent orders and a Chapter 11 bankruptcy filing due to issues and disputes with Mercury, has announced its acquisition by TabaPay. TabaPay will acquire some of its assets and affiliates, in a deal detailed by Fintech Business Weekly last month, subject to bankruptcy court approval.
Forbes reported that the acquisition signifies a strategic move to transfer San Francisco-based Synapse’s lending, brokerage and credit and debit card issuing platforms to California-based TabaPay. TabaPay’s interest in Synapse has been brewing for about a year, as per Rodney Robinson, co-founder and President of TabaPay -culminating in a finalised agreement reported last week.
TabaPay, known for its transaction revenue from merchant acquiring, seeks to leverage Synapse’s capabilities to expand its service offerings to existing clients, thereby diversifying revenue streams with deposits and interchange. Forbes revealed TabaPay’s intent to utilise Synapse’s licences and technology to offer bank-like services to both Synapse’s and its own clientele, shifting away from an intermediary role to a direct provider. This move is timely, given the heightened regulatory scrutiny on fintech lending platforms, particularly those facilitating buy-now, pay-later schemes. The acquisition presents an opportunity for TabaPay to cater to the needs of fintechs left with limited options due to regulatory actions.
Synapse's acquisition mirrors a broader trend in the fintech ecosystem, exemplifying the consolidation within BaaS platforms. The past year has witnessed a wave of consolidation within the BaaS space. Our report, "The State of Banking-as-a-Service in the UK & Europe" co-authored with Toqio, anticipated this very trend. With recent acquisitions such as Apto Payments and Bond by Qenta and FIS respectively, and the restructuring efforts at Synctera and Treasury Prime, the fintech infrastructure landscape is evolving rapidly.
While the long-term implications of Synapse’s acquisition are still unfolding, the TabaPay-Synapse deal reinforces the ongoing consolidation within fintech infrastructure, a trend likely to persist. To gain a deeper understanding of this evolving landscape, be sure to check out our full report by clicking the link below ⬇️
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Welcome to the crossroads of fintech's future with Edition #115, where each headline leads to an insightful discovery.
The Week's Hot 10! ♨️🔟
‘Card’ chronicles:
⤷ Mastercard unveiled a mobile virtual card app that enables virtual commercial cards to be seamlessly added to digital wallets for streamlined travel and business expenses. The app is designed to provide financial institutions with greater options for delivering secure contactless payment solutions.
⤷ Marqeta partnered with financial wellness benefits provider Rain to enable employers to disburse earned wages onto the cards seamlessly.
Policy power plays-
⤷ The UK government published a Smart Data Roadmap, setting out its plans to explore the use of Smart Data powers in the Data Protection and Digital Information (DPDI) Bill in sectors, including energy, retail, transport and telecommunications.
⤷ The Canadian government confirmed consumer-driven banking legislation by the end of the year in its Budget 2024 and confirmed that the Financial Consumer Agency of Canada (FCAC) will oversee the new system.
Banks fuel the fintech fire!
⤷ Landesbank Baden-Württemberg, Germany’s federal bank, announced plans to start offering cryptocurrency custody services in partnership with the Bitpanda exchange.
⤷ The Bank of Israel announced plans to launch a sandbox for private sector players to experiment with a possible central bank digital currency (CBDC).
⤷ Brankas secured the PJP Category 2 Licence for Account Information (AInS) from Bank Indonesia, marking an open banking data milestone for Indonesia and giving businesses added visibility on payment transactions.
Expansion plans in full swing -
⤷ Business banking startup Mercury expanded into consumer banking with the launch of Mercury Personal, a personal banking experience designed to help builders in tech optimise their money.
⤷ Tuum expanded in the Middle East, aligning with its strategy to partner with local banks, financial institutions, and fintechs for access to its core banking platform.
⤷ TabaPay acquired Synapse's assets post its bankruptcy, enabling expanded financial services for fintechs and institutions.
Now, for the ‘byte’-sized fintech buzz –
In the thriving universe of Embedded Finance, strategic alliances light the path to bespoke solutions, fueling empowerment for businesses and consumers alike.
SoFi and its subsidiary Galileo teamed with small business banking platform Rapid Finance to launch the Rapid Access Mastercard. The new offering is a prepaid commercial card that allows Rapid Finance’s small business customers with a line of credit in good standing to access their funds.
Episode Six (E6), a provider of enterprise-grade payment processing and ledger infrastructure, teamed with Loop, a major e-Money institution (EMI), to power its Fintech-as-a-Service offering in the Kingdom of Saudi Arabia (KSA). E6 will power Loop’s cards, wallets and instant payment solutions to fulfil Loop’s strategic goal to become a digital financial services enabler.
The Open Finance realm witnessed an increasing focus on improving financial data processing and transactions.
The Open Finance African Group launched in Central and West Africa. The Open Finance African Group in Africa aims to establish a common and harmonised vision for data processing.
Norwegian accounting software provider Duett partnered with Mastercard for open banking bank integrations to streamline payment transactions and collect more useful information in the financial system.
In the pulsating world of Digital Finance, innovation and expansion herald a fresh era of financial possibilities.
Spend management startup Ramp raised another $150M as an extension of Ramp’s Series D. The new funding will be used to “triple down” on innovation, including using AI capabilities to automate cumbersome processes, provide deeper insights into spending, enhance decision-making capabilities, and more.
Mumbai-based Jio Financial Services (JFS) and US asset management firm BlackRock signed an agreement to form a 50:50 joint venture to undertake wealth business, including incorporation of a wealth management company and subsequent incorporation of a brokerage company in India.
Companies were seen leveraging their strengths and expertise to pioneer new solutions in the fast-paced world of Fintech Infrastructure, meeting the dynamic demands of evolving markets.
Mambu and Leeds Building Society entered a strategic partnership to help Leeds modernise its core banking system. By using Mambu, underpinned by Amazon Web Services (AWS), Leeds Building Society will have an enhanced capability to build innovative mortgage and savings products.
J.P. Morgan partnered with Codat, a business data API provider, to ramp up virtual card adoption. Codat's new Supplier Enablement data product streamlines data sharing between businesses and banks, allowing banks to target potential virtual card users more effectively. This collaboration aims to replace checks with secure and efficient virtual card payments.
In the vibrant world of Decentralised Finance, there is a surge of initiatives to foster education, awareness, and community engagement.
Tether forged a partnership with Fuze, a provider of digital asset infrastructure, to advance education and awareness regarding digital assets in Turkey and the Middle East. The collaboration, formalised through a Memorandum of Understanding (MoU), will focus on various educational aspects within the digital asset domain.
The Reserve Bank of New Zealand opened a public consultation on the design of a possible central bank digital currency (CBDC) called ‘digital cash’. The consultation paper asked citizens in the country to respond on digital cash design, whether or not interest should be paid, and if there should be holding limits.
In the landscape of Green Finance, the winds of change blow with the adoption of AI, shaping a sustainable tomorrow.
Finastra integrated AI-powered ESG scoring into its working capital solution, Trade Innovation. Under the update, users can power more sustainable business flows, tapping into automated reports to measure key data against internationally recognised frameworks.
Carbon footprint tracking expert Cogo partnered with Personetics, an AI-based personalised engagement platform for financial institutions, to make it easier for banks to provide their customers with climate-conscious banking solutions.
And that's a wrap 👋
We hope you enjoyed this edition of the Weekly Fintech Brew!
As a reward for making it all the way here, enjoy a curated list of awesome fintech resources to keep your curiosity cup full to the brim. Cheers to continuous learning!
🔗 Link Up! –
Modernizing Financial Markets with Wholesale Central Bank Digital Currency (wCBDC) Report - World Economic Forum
2024 Boku Global Ecommerce Report Report - Boku
Mastering the Art of Delivering Payments Acceptance Excellence: Choice of Payment Methods and New Ways to Pay Blog - Worldline
The power of integration in the wealth management experience Blog - Envestnet
Adaptable Platforms, Strong Alliances: BaaS consolidation in action Blog - WhiteSight
The Innovation Playbook Report - WhiteSight
Hungry for more fintech insights? Check out some of our other work at WhiteSight.
If you're someone who likes to read think pieces, you will likely love our monthly blog, Fintersections, where our team members analyse the convergence of fintech with the world.
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