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To what extent do the capabilities of community banks (such as Evolve Bank and Trust, Sutton Bank, WebBank, Bancorp) impact the BaaS tech stack?
Anonymous
Former Galileo executive
Guest: The banks offer direction and approval of which features they'll allow. And so each bank's a little bit different. It depends on their risk level and the types of programs they want to support. So for example, WebBank, they had done some prepaid early on, and then they quit doing prepaid. They didn't want to do any prepaid for a while, and they were just doing lending and credit.
And then my understanding recently here, they're starting to get back into the prepaid, whereas Bancorp primarily did prepaid and debit but didn't do a lot of credit and I'm not sure where they're at on credit today, but each one has a different mix depending on what they want to support from a product offering perspective. They don't actually bring that functionality. They just approve that functionally can be there.
It's really the processor and the BaaS player who provides the actual functionality. And then each of these banks, they have different approaches from a compliance perspective. Some of the banks will completely dictate what needs to happen from a compliance perspective and expect that the FinTech just do it.
In other cases, they're much more cooperative with them where they'll help them out through it. The compliance is a pretty big deal because the banks are on the hook with the regulators, they're going to be audited.
And so the banks have to ensure that any of their programs that are running are following the compliance and the bank directly turns that to the program managers and the BaaS providers.
Again, in the case of the direct processor relationships, typically the processors aren't directly involved in the compliance. They're supporting the program manager or the FinTech in that compliance, but they're not the ones directly responsible for it. So between the banks, it just depends on how they approach compliance and on how cooperative they are with the FinTechs.
