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Today: June 16, 2024
January 29, 2024
1 min read

Fintechs tackle banking-as-a-service aftermath.

The banking-as-a-service (BaaS) space is facing increased scrutiny and regulatory crackdowns, forcing financial institutions to strengthen compliance and oversight of their fintech partners. According to S&P Global Market Intelligence, banks that provide BaaS to fintech companies accounted for 13.5% of severe enforcement actions issued by regulators in 2023. The stricter regulation is causing fintechs to reevaluate their BaaS relationships and consider redundancy by taking on multiple sponsor banks. Fintechs are also focusing on proving the profitability of their businesses and embracing compliance and risk management as core principles. Middleware providers are also being reassessed, as fintechs are questioning their value and considering direct contracts with banks for their banking services.

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