Banking Technology Magazine June 2024 issue out now
Cover story: THE ESG PUZZLE – Talk the talk, but also walk the walk.
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Welcome to the June edition of the Banking Technology Magazine. The talk of the month has been the collapse of Banking-as-a-Service (BaaS) provider Synapse and the ripples it has sent across the BaaS and fintech industry in the US. “Large chunks of the sector today are a downright mess,” TechCrunch observed.
According to Jason Mikula, a fintech advisor and consultant in the US who has been closely following the story, as many as 100 fintechs and ten million end customers could be impacted by Synapse’s demise. Casualties include Copper, a banking app for teens, that had to abruptly halt its banking deposits and debit card offerings, and Mainvest, a lender to restaurant businesses, that had to completely shut up shop.
Among other affected fintechs that used Synapse’s services for embedded finance are crypto app Juno, savings app Yotta and GigWage, a workforce management platform for businesses that employ contractors.
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One of Synapse’s banking partners, Lineage Bank, a small bank in Tennessee, was hit with a consent order by the Federal Deposit Insurance Corp (FDIC) earlier this year, in relation to its fintech partnerships. The consent order mandated the bank to increase capital levels, significantly improve its risk management as well as terminate agreements with some of its fintech partners within.
Meanwhile, Synapse’s co-founder and CEO, Sankaet Pathak, dialled into bankruptcy hearings from the luxury island of Santorini, Greece, and the fintech’s general counsel, Tracey Guerin, did the same from Rome, Italy.
Furthermore, The Information alleges that the financial discrepancies have been known to its business partners – banks and investors – for as long as two years.
And so the saga continues. Our editorial team will be bringing you updates online as more details emerge. Subscribe to our free newsletter and keep an eye on the website for the latest developments
