The article discusses the tumultuous landscape of Banking as a Service (BaaS) in 2024, highlighting how partner banks and fintechs reevaluated their collaborations due to rising regulatory challenges. Lauren McCollom from Grasshopper described the year as both enlightening and chaotic, with increased consent orders prompting many fintechs to seek more reliable banking partners. Meanwhile, banks were compelled to scrutinize their existing BaaS programs deeply. Overall, a decisive shift towards compliance and risk mitigation emerged during this challenging period, fostering an environment for new partnerships in the following year.
One major difficulty BaaS partners faced was dealing with enforcement actions, reconciliation issues born out of underbaked BaaS programs, and a desire by fintechs to build redundancy in their bank partnerships.
This fintech outreach wave fueled pipelines and enabled partner banks to engage with leading fintechs looking for safety and stability in long-term programs with an established partner bank.
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