Banks Rewrite Their BaaS Strategies Around Deposits and Fees
Embedded finance can bring banks deposits, fee income and assets generated through somebody else’s distribution. Earnings results showed banks don’t all want the same mix. Fifth Third is growing deposits and fees through Newline. FinTech partnerships generate nearly all The Bancorp’s deposits, although the bank moves some deposits to other institutions. First Internet Bank is […] The post Banks…
Banks are reevaluating their Banking-as-a-Service (BaaS) strategies, focusing on deposits, fees, and partnerships with FinTech companies. Fifth Third Bank is growing deposits and fees through its Newline service, while The Bancorp has built its funding base around FinTech relationships, generating $40.9 million in FinTech fees during Q2.
First Internet Bank is increasing its BaaS fee revenue and moving FinTech deposits off its balance sheet. FV Bank has launched a managed account offering, allowing FinTechs and payment platforms to offer accounts directly while handling compliance functions. Regulatory agencies warn of risks associated with these arrangements, including fragmented operations and reliance on third parties for compliance functions.
Banks remain responsible for compliance, even when third parties perform these functions. The emergence of BaaS has led to a higher volume of identity verification activities, with customer login being the most common verification point.
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