US Community Banks Rapidly Expanding Fintech BaaS Partnerships in 2023

A July 2023 report highlighted the rapid expansion of partnerships between US community banks and fintechs through white-label Banking-as-a-Service programs. First Bank was cited as an example of a community bank using BaaS collaborations to speed up applications and expand product offerings for fintech partners. According to a Cornerstone Advisors report, 66% of US banks had partnered with at least one fintech, with some community banks maintaining relationships with up to a dozen fintechs simultaneously.

These partnerships typically involve revenue-sharing arrangements where banks provide the charter, compliance infrastructure, and deposit insurance while fintechs handle customer acquisition and front-end experience. Treasury Prime was highlighted as a platform enabling multi-bank strategies through API software, allowing fintechs to diversify risk, access varied products, and scale deposits beyond single-bank limits. The trend comes amid increased regulatory scrutiny, with consent orders issued against Cross River Bank and Blue Ridge Bank mandating compliance improvements.

Despite these challenges, community banks see fintech partnerships as critical for competing with larger institutions and generating new revenue streams.