Thread by @DanAkivis

Durbin-exempt banks are powering the new wave of fintechs. Here is what it takes to successfully partner with these banks 👇

Full report here: danakivis.medium.com/a-tale-of-symb…

First a bit of background: Banks differ in their core competencies. Banks like @MyLSB are focused on debit and savings products, WebBank and @crossriverbank are focused on credit products, and @EvolveBank is focused on a bit of everything.

The readiness of a bank to partner with the appropriate fintech startup depends on a few factors - financing history of the startup, growth plans, strategic initiatives, compliance programs, and most pertinently, the specific plans for how the fintech will scale.

The BaaS platform determines the capabilities that can be offered. Banks think about buying versus building just like a startup - its a trade off between speed and control. BaaS providers include @synapsefi, @unit_co_, @moov, @bondfintech, @productfy, and @modernbanc

Compliance is central to any successful partnership. Which party owns the compliance flow becomes a point of negotiation - fintechs should spend time communicating with and educating their respective bank partners on their initiatives and alignment with the bank’s concerns.

The sales cycle. The amount of time a typical partnership takes is 6-9 months and is largely dependent on a few key factors. The primary one is whether the bank has in-house technical resources.

The negotiation process - a game of give and take. First is cost. A bank could charge up to $150K in upfront fees to onboard fintechs. However, this cost could be paid out at various contract-signing milestones.

Part of onboarding is integrating into the bank’s processor (generally @Galileo_Tweets, @i2cinc, etc.). It is worth identifying the processor that is best suited for the fintech’s short and long term goals before identifying a banking partner with which to integrate.

Each step has its own nuances, but ultimately is part of any bank partnership. A few predictions on what the future looks like:

Banks will invest in building out their own infrastructure. More funding and more exits in the BaaS space. Sub-Durbin Amendment bank competition will go much wider than the community. Banks will modernize their core ledgering technology.

Congrats to all of the investors who are powering the next generation BaaS platforms - @lightspeedvp, @SciFiVC, @operatorpartner, @tlvventures, @a16z, @Walkabout, @ruckerparkvc