You might say Banking as a Service is beneath siege.
The variety of extreme enforcement actions BaaS banks obtained skyrocketed in 2023 to 13.5% of the full. When you think about there are in all probability solely round 100 banks out of 4,800 which are concerned in banking as a service, you possibly can 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 more difficult surroundings 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 modern banks are more and more annoyed with the character of therapy by their supervisors, examiners and regulators who refuse to have interaction in pragmatic or significant dialogue.”
That is the fact that banks and fintech function in right now. There’s regulation by enforcement with no clear pointers on tips on how to function throughout the legislation.
That has to vary. Or we danger monetary innovation being severely stifled as nobody desires to attempt something new.
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Small group of banking-as-a-service banks logs large 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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