Global Fintech Interview with Sankaet Pathak, CEO at Synapse

Hi, Sankaet, welcome to our Fintech interview Series. Please tell us a bit about your journey in the tech domain. 

Upon arriving in the U.S. from India to pursue my studies in Computer Engineering, Mathematical Sciences, and Physics at the University of Memphis, I encountered the challenges of opening a bank account and obtaining credit without a financial history. I was not part of the traditional financial framework, and I realized that there were millions of others who faced similar difficulties. Basic requirements such as a valid U.S. mailing address or Social Security number could pose significant obstacles for those struggling to gain access.  In 2014, I co-founded Synapse with a mission to ensure that everyone around the world has access to best-in-class financial products, regardless of their net worth.

How are you integrating a wide range of financial products with your core product with speed and efficiency on the Synapse platform?

Synapse is the largest Banking-as-a-Service (BaaS) provider and one of few that is licensed and regulated. We work with banks, fintechs and enterprises to launch and scale a wide range of financial services for fintech partners as well as enterprises to launch digital-first products with embedded financial features. Synapse’s unified BaaS platform is the most comprehensive on the market, providing payment, card issuance, deposit, lending, compliance, credit and investment solutions through simple APIs to more than 18 million end users.

In addition, to address the speed and efficiency part of your question, the greatest factor influencing time-to-launch in today’s environment is compliance review and approvals with bank partners. Because Synapse Brokerage LLC is a regulated member of FINRA, in most cases, we are driving that review and when services are required by our partner banks, we know through extensive experience what use-cases and funds flow scenarios are likely to be approved. Therefore, we can assist our customers through this process efficiently and effectively.

Also Read: Global Fintech Interview with Sagar Rajgopal, President and Chief Customer Officer at Ubiquity

What were the biggest tech challenges you faced and obstacles you overcame in context to modern payment solutions?

Modern payment solutions face the operational challenges of KYC, fraud and AML. In order to drive sustainable growth, and be compliant with local regulations across regions, providers must execute rigorous KYC and geographic risk assessment. 

Synapse developed a suite of KYC technologies and processes that our customers use to protect their platforms against identity theft, fraud, and anti-money laundering (AML) schemes, and that Synapse uses to advance global product delivery.

How has neo banking disrupted traditional banking and delivered new services like credit builder loans and branded cards to new audiences?

Neo banking has disrupted traditional banking through increased financial inclusion, particularly for underbanked groups.  Approximately 1.7 billion plus adults worldwide are currently underbanked and by extension, have limited access to earnings on savings, investments, credit, or other tools to build wealth.

Today, through the Synapse platform, we empower fintechs to provide accessible financial services for the borderless workforce, such as gig workers, influencers and freelancers as well as immigrants and travelers from around the world.  To further support these populations, Synapse launched Synapse Global Cash – a secure cash management account enabling residents in 35+ countries to invest, hold and spend U.S. dollars. As an added benefit, Synapse Global Cash end users in countries experiencing high inflation or negative interest rates receive access to more stable stores of value than their local currencies, enabling them to build financial security.

What do you think is the most significant technology threat or opportunity for your organization right now? How would you mitigate that threat or respond to that opportunity?  

A rising concern due to the outgrowth of the recent shocks to the banking sector based on the collapse of FTX and the few but surprising bank failures that have occurred more recently is the safety and security of funds for deposit holders. At the same time, regulators, banks and fintechs are all increasingly focused on compliance, risk diversification and retaining trust among their customer base. While the current climate is a concern and threat for many, because Synapse is licensed and regulated and can participate in the flow of funds, we see this as an opportunity. To this end, Synapse recently launched Modular Banking. 

Modular banking is an approach where a licensed and regulated BaaS platform provider, such as Synapse, integrates with multiple bank partners. Each bank partner supports a set of services that best fit their strategy and risk appetite. For example, one bank partner may provide deposit and money movement services, while another may choose to offer international transfers. Fintech customers benefit from the best terms and services from any or all of the BaaS provider’s modular banking partners and the banking partners generate new business while diversifying their sources of income with limited regulatory risk and compliance burdens.

Also Read: Global Fintech Interview with Brian Duncan, President at me&u

How is the role of a CEO in the Fintech space different from those in other industries – such as retail e-commerce or software development? 

Fintech CEOs must intricately understand and continue to drive compliance in an evolving regulatory landscape. My understanding of compliance is what drove me to make sure Synapse obtained its broker license and achieved a leg up on regulatory requirements. Synapse is a member of FINRA and SIPC.  We also just announced the formation of a new Policy & Regulatory Advisory Board. The Board guides Synapse’s leaders on how to work with our stakeholders to best promote and support rules and strong governance within the industry. This announcement fits into Synapse’s broader strategic focus of collaborating with regulators to ensure end users are protected and also drives innovation within the space. Synapse also recently joined the Financial Technology Association and is the only regulated BaaS platform.

What are some sources for learning you would recommend for entrepreneurs who are just starting in the digital domain?

There is no comprehensive book or hub on the BaaS / fintech industry. However, there are entrepreneurs on social media, such as LinkedIn or Substack, who are doing the work on these products themselves and who share their perspectives extensively. I recommend people seek out those experts with the first-hand knowledge they’re specifically interested in.

We’d love to know what are your predictions for the future of FinTech?   

We stand at the brink of an exciting banking revolution, propelled by the emergence of new fintech companies and BaaS platforms, the advancement of cellular capabilities, and the evolving needs and sentiments of consumers. According to findings from Zion Market Research, the global fintech-as-a-service platform market size is predicted to grow to around $949 billion by 2028.

I’m excited to see how this growth will impact the embedded finance ecosystem, which is currently still in its infancy. Consumers can now use “buy now, pay later” services for online purchases, make one-click payments on Uber, Amazon, or Walmart, and add built-in insurance offerings to their travel and accommodation bookings. As the industry matures, we will only see more specialized and efficient banking services that will integrate into the fabric of our everyday digital experiences.

This growth will also lead to more regulation. The infrastructure of embedded finance is in its very early stages, and the market has moved so far with relatively little oversight or quality control. As the industry matures, regulators will become more involved, ultimately benefiting consumers by creating higher-quality banking products.

Also Read: Global Fintech Interview with Juha Viitala, CEO at Membrane Finance and EUROe Project

Tell us about some of the top FinTech events that you’ll be participating in (as a speaker or guest) in 2023.

I’ll be speaking at the Fintech Nexus USA 2023 conference on May 11 in New York City. If you’ll be in attendance, please come and say hi!

Thank you, Sankaet! That was fun and we hope to see you back on globalfintechseries.com soon.

[To share your insights with us, please write to sghosh@martechseries.com]