BaaS Company Spotlight 5/8: Synapse — The DIY BaaS with a broad range of services

This spotlight of a leading banking as a service provider is part of Tearsheet’s coverage of BaaS. Please see our BaaS Buyers Guide for more information.

• Who we spoke to: Sankaet Pathak (founder and CEO) and Sebastian Sutherland (BD)
• Establishment date: 2014
• Bank license: No, they partner with Evolve Bank & Trust
• API Documentation: https://docs.synapsefi.com/
• Read/listen to Tearsheet's interview with Synapse's Sankaet Pathak

History

The idea for Synapse started when Sankaet Pathak, Synapse’s founder, came from India at 17 to pursue his education at the University of Memphis. During his masters, Sankaet founded a closed loop restaurant payments system, where people could make a direct bank transfer instead of a credit card or debit card payment. Although it didn’t go anywhere, he saw the potential for a BaaS style system, where he would provide the infrastructure for banking services and let others build services on top of it.

Originally Synapse focused on payments, but soon pivoted to the general financial industry, offering products from accounts to crypto payments via API banking through Evolve Bank & Trust. With over $10 Billion in transactions and 80+ staff (and adding 2-5 people every second week), Synapse is growing quickly.

Services Provided

Anything that can be found on a bank’s homepage, Synapse can whitelabel. So far, Synapse has built products in the payments, deposits, and lending categories (which Synapse calls ‘Buckets’). Payments include ACH, wire, and card processing transactions; deposits include opening up deposit accounts, account routing numbers and debit card issuance; and lending includes the ability for any technology company to originate and service a loan. Synapse also provides additional services including crypto wallets. As part of its services, the company also offers compliance and verification.

Differentiator

Synapse has three main differentiators: the broad range of services it offers, the commercial model of a flat monthly fee for services, and the ability to deploy quickly.

Synapse also focuses on its mission of ‘simplifying banking’, which encompasses frontend and backend processes. It strives to be a one-stop-shop for everything, making it easy for any fintech to launch banking services. For example, in Synapse’s loan product, the regulatory complexities normally associated with lending are addressed -- Synapse takes care of sending loan agreements, credit score agreements, reminds users when payments are due, and helps with collection efforts.

Chief Competitor

Synapse wasn’t the first to get into this market, and Synapse would consider the BaaS incumbents (Cambr, WebBank, Cross River, The Bancorp Bank) to be its biggest competitors. But even the smaller community banks that are opening up their APIs could be considered a competitor to some extent (see CSFB’s partnership with TransferWise). BBVA could be considered a serious competitor as it expands internationally.

Target Customer

Synapse has historically relied on word of mouth to sell its services (it currently only has two sales reps). Ttarget customers are early stage technology startups. It does work with companies of any industry and size.

Definition of BaaS

Synapse doesn’t have a definition of BaaS since it doesn’t use this term in explaining its products.

Future Plans

As Synapse matures, it’s going deeper into verticals. In lending, that includes small business lending, secured lending, and mortgages. Next year it’s going international to allow any developer, anywhere in the world, to launch a bank product.  

Synapse’s feature roadmap for 2019 is here.

Clients and Case Studies

Synapse has around 150 clients, and is adding 2-4 clients per week. The company says its rate of growth doubles every year. Although Synapse wasn’t willing to share any referenceable client names, based on research, new challenger banks Dave and Empower both appear to be clients.