Community banks and financial institutions (FIs) can increase revenue, deposits, and customers by offering banking as a service (BaaS) relationships, but with potential compliance burdens and risks, what’s the secret to partnership success?
According to a recent bankdirector.com report, originally published in the second quarter 2023 issue of Bank Director magazine and sponsored by Troutman Pepper, FIs need to consider the risks and responsibilities of outsourcing BaaS and invest in partnerships with providers who prioritize compliance.
Because of Pathward’s time-tested understanding of the BaaS space, Troutman Pepper partner James Stevens invited Pathward’s Lauren Brecht to participate in the report. Brecht, who serves as Senior Vice President and Managing Counsel, explains in the report that "success starts and ends with compliance" for Pathward.
The report also provides FIs advice on how to handle pre-partnership strategy and policies, communication tactics, and where and who to invest in both internally and externally in anticipation of outsourcing BaaS products.
Brecht notes that Pathward considers all this on the third-party side of things by ensuring “we’re monitoring our partners [and] making sure that they’re buttoned up,” as well. She adds that it’s critical and essential that third parties offer strong oversight and communication throughout the partnership.
Pathward®, N.A., a national bank, is a subsidiary of Pathward Financial, Inc. (Nasdaq: CASH). Pathward is a U.S.-based financial empowerment company driven by its purpose to power financial inclusion. Pathward strives to increase financial availability, choice, and opportunity across our Banking as a Service and Commercial Finance business lines. The strategic business lines provide end-to-end support to individuals and businesses. Learn more at Pathward.com.