Recent BaaS Shake-up Shines a Light on Industry Weakness

Apr 02, 2024 | Posted by Brian Cosgray and Brian Strom

There’s been surge of banking regulatory activity impacting the platform providers behind consumer benefit accounts, highlighting potential risks faced by select newer platform providers.

Market entrants often speed time to market by using a banking-as-a-service (BaaS) partner such as Unit or Treasury Prime. In this model, BaaS companies serve as intermediaries between the platform provider and the bank, providing account management, ledger, payment, and regulatory services.

This fast track may seem like a safe and secure shortcut to viability. However, recent news shows that there are significant risks associated with this model. Recently leaked documents from Treasury Prime shed light on the challenges BaaS companies are facing—namely, increased regulatory scrutiny. Subsequently, they are pulling back from partnering with fintechs.

Banks themselves are starting to wind down their relationships with BaaS companies as regulators make it clear that the preferred relationship is direct oversight from a bank to the fintech, not through an intermediary, going so far as to issue consent orders against several banks. This banking shake-up includes three key banks used by platform providers in our space: Piermont, Choice Bank, and Blue Ridge Bank.

In short, as banking regulators increase scrutiny over these partnerships, both bank and BaaS partners are rethinking this model and are leaving many fintechs scrambling for a new strategy.

Let us be clear - Elevate has never used a BaaS intermediary and has no need to ever do so, as we own all this functionality internally.

When we set out on our mission to build Elevate, we had the experience, time, and resources to create a solid infrastructure built on a foundation of direct operating relationships with banking partners, bypassing BaaS intermediaries. We had the foresight to plan for fluctuations in industry regulations and guidance, and we built that flexibility into every aspect of our product. As regulatory scrutiny increases, our direct banking relationships with established banking partners can easily withstand this pressure test and any yet to come.

Our advice to any account administrators—TPAs, financial institutions, health plans, and benefit platforms—who are currently evaluating technical platform options, is that it is critical to review underlying infrastructure and partnerships involved in a potential vendor’s operating model. Piecemeal infrastructure can indicate weaknesses, potential risks, added costs, and inflexibility. These drawbacks can significantly impact your revenue, service responsiveness, and ability to scale.

At Elevate, we take pride in the fact that we’ve distinguished ourselves by opting for a direct operating relationship with banks from the outset. This approach not only mitigates risks associated with BaaS partnerships but also offers greater stability and scalability.

We welcome discussion about this topic. Please reach out to us at or to continue this conversation.


- Brian Cosgray, Elevate co-founder and CEO & Brian Strom, Elevate co-founder and CTO

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