You may say Banking as a Service is underneath siege.
The variety of extreme enforcement actions BaaS banks acquired skyrocketed in 2023 to 13.5% of the whole. When you think about there are most likely solely round 100 banks out of 4,800 which might be concerned in banking as a service, you may see why this quantity is disturbing.
And that is solely these enforcement actions which were made public, there are probably many extra that we have no idea about.
There has by no means been a tougher setting for these banks seeking to present banking companies to fintechs and different non-banks.
Here’s what Phil Goldfeder, CEO of the American Fintech Council needed to say:
“Accountable revolutionary banks are more and more annoyed with the character of therapy by their supervisors, examiners and regulators who refuse to interact in pragmatic or significant dialogue.”
That is the truth that banks and fintech function in right now. There may be regulation by enforcement with no clear tips on how one can function inside the regulation.
That has to vary. Or we danger monetary innovation being severely stifled as nobody desires to strive something new.
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Small group of banking-as-a-service banks logs huge variety of enforcement actions
US banks that present banking as a service to fintech companions accounted for greater than 10% of extreme enforcement actions issued by federal financial institution regulators in 2023, an outsized share provided that the variety of banks partnering with fintechs is small.
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