Fintech
Fintech Nexus Newsletter (May 23, 2024): A Fintech Mess: Synapse, Evolve and Stuck Customer Funds
The slow dumpster fire that is Synapse-Evolve fusion has turned into a nightmare for many fintech customers.
Synapse acted as an intermediary between banks and fintechs, but there were several disagreements between Synapse and these banks and fintechs. Consumers who assumed their money was safe are caught in the middle.
Synapse had contracts with 20 banks and around 100 fintechs for a total of 10 million end users. Many of these end users have been blocked from accessing their funds.
There are multiple stories of consumers with tens of thousands of dollars they can’t access. The money does not appear to be gone, just frozen in place, while Synapse resolves its differences with one of its largest banking partners, Evolve Bank & Trust.
Hearings in the Synapse bankruptcy case are underway in California this week as the judge tries to understand a complex and confusing situation.
This is not a good outlook for banking-as-a-service and fintech in general. This problem must be resolved quickly, otherwise we can expect politicians to intervene.
In the foreground
> Fintech nightmare: “I have almost $38,000 tied up” after Synapse collapse
Synapse is an intermediary between customer-facing fintech brands and FDIC-backed banks, but has had disagreements over the amount owed in customer balances.
From the Fintech Nexus
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Peter Renton is president and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and is the author and creator of the Individual fintech podcastthe first and longest running fintech interview series.