Matching a Fintech Program to the Right Sponsor Bank - Christienne Genaro

In this episode, Sarah Grotta, Deputy Chief Fintech Officer at FinWise Bank, discusses the concept of a backup bank with Christienne Genaro, who manages bank partnerships at Galileo. They explore the role of bank partnerships in the fintech marketplace and the importance of compliance in these relationships. They also discuss the process of finding the right sponsor bank for a fintech and the shift in use cases, including cross-border solutions and embedded finance.

The conversation highlights the need for alignment between fintechs and banks on BSA and reporting, as well as the shift away from the interchange business model. They emphasize that a backup bank is not just a backup prom date, but a strategic partnership that requires careful consideration and preparation. They also explore the idea of banks forming backup bank coalitions to provide customers with alternative options.

The conversation touches on the factors that may prompt a fintech to seek a second bank, such as the need for diversification and the changing regulatory landscape. They also discuss the importance of building strong relationships between issuers, processors, and banks to ensure success.

Takeaways

• Bank partnerships play a crucial role in the fintech marketplace, and finding the right sponsor bank is essential for fintech success.
• Compliance is a key consideration in bank partnerships, and fintechs should seek sponsor banks that are reg savvy and have a good relationship with regulators.
• Fintechs are exploring new use cases, including cross-border solutions and embedded finance, as they expand their product offerings.
• Alignment on BSA and reporting is crucial for fintechs and banks to ensure a successful partnership.
• The marketplace is shifting away from the interchange business model, and fintechs are looking for sustainable revenue streams beyond interchange fees.
• Processors like Galileo can help fintechs find the right sponsor bank by providing curated lists and facilitating introductions. Having a backup bank is not just a backup prom date, but a strategic partnership that requires careful consideration and preparation.
• Banks may form backup bank coalitions to provide customers with alternative options.
• Factors that may prompt a fintech to seek a second bank include the need for diversification and the changing regulatory landscape.
• Building strong relationships between issuers, processors, and banks is crucial for success in the fintech industry.