Founding Stories: Synapse | Summary and Q&A

TL;DR

CEO of Synapse, Sankaet Pathak, discusses the challenges in building Fintech infrastructure and how it is enabling the rise of new consumer and SMB-focused fintechs.

Key Insights

• ♿ Access to banking infrastructure is crucial for fintech companies to offer innovative financial products to consumers and SMBs.
• 😀 Fintechs face significant challenges in obtaining banking partnerships, navigating regulatory compliance, and building the necessary processing layers for banking functions.
• 🪚 Synapse aims to democratize financial access by providing modular and comprehensive banking infrastructure that reduces the barriers to entry for fintech companies.
• 👾 Non-financial companies are increasingly entering the fintech space by leveraging their existing platforms and customer base to offer financial products and services.

Transcript

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Questions & Answers

Q: What inspired the CEO of Synapse to start a company in the banking infrastructure space?

The CEO's personal experience as an immigrant trying to open a bank account in the US, facing multiple difficulties and barriers, motivated him to build a more inclusive and accessible banking infrastructure.

Q: How does Synapse enable fintech companies to bring their innovative financial products to market?

Synapse provides modular and comprehensive banking infrastructure, including banking partnerships, compliance services, and processing layers for payment, card issuance, and other banking functions, allowing fintechs to focus on building their products.

Q: What are the challenges faced by banks and fintech companies in ensuring compliance with regulations?

Regulatory compliance requires banks and fintechs to implement robust policies and procedures, verify the identity of customers, and monitor transactions for suspicious activities. Failure to comply could result in penalties and loss of authorization to operate.

Q: How does Synapse reduce the barriers to entry for fintech companies in the financial services industry?

By offering comprehensive and modular banking infrastructure, Synapse enables fintech companies to access banking partnerships, ensure compliance with regulations, and handle payment processing and other banking functions more efficiently and effectively.

Summary

In this video, Angela Strange, a General Partner at Andreessen Horowitz, interviews Sankaet Pathak, the CEO of Synapse, about the trends and infrastructure in the financial services industry. They discuss the founding story of Synapse, the challenges faced by immigrants in opening bank accounts in the US, and the idea of building a more inclusive banking infrastructure. They also talk about the importance of easy access to financial services and the barriers faced by fintech startups in getting to market. Pathak explains the need for banking partnerships, compliance automation, and various processing layers in the infrastructure. They also discuss how Synapse convinced its first customers to use their services and the benefits of being a one-stop shop for financial products.

Questions & Answers

Q: What is the founding story of Synapse?

Pathak shares his experience of moving to America from India and having difficulty opening a bank account due to lack of a social security number. This inspired him to build a banking infrastructure that is more inclusive and accessible to all.

Q: Why is it important to make financial services easier to access?

Pathak explains that there are different types of customers: those who need financial education, those who need process automation, and those who consider themselves self-sufficient. By making financial services more accessible, it can help all types of customers and ensure that finances work for everyone.

Q: How can new fintech companies get to market faster?

Banks have partnerships with fintech startups to outsource customer acquisition and access new technologies. By partnering with these startups, banks can acquire new deposits at a lower cost, while startups can leverage the existing infrastructure and compliance of the banks.

Q: What are the risks faced by banks in working with fintech companies?

Banks need to be cautious about compliance, deceptive marketing, and overall risk management when working with fintech companies. They need to ensure that the fintech startups they partner with are compliant and have the necessary policies and procedures in place.

Q: What are some of the services offered by Synapse?

Synapse offers banking partnerships, compliance automation, and various processing layers including payment processing, card issuance, and remote deposit capture. They aim to provide a one-stop shop for financial products and help startups reduce their barrier to entry.

Q: How did Synapse convince its first customers to use their services?

Synapse initially focused on speed and accessibility, promising fast access to financial products and providing support through channels like Slack. They also differentiated themselves by being a one-stop shop, offering a comprehensive range of services that other companies might need to obtain from multiple partners.

Q: What does the agreement with Synapse and its partners look like for customers?

Customers sign an agreement with Synapse, and Synapse manages all the necessary partnerships and approvals behind the scenes. The goal is to be a single point of contact for customers, making it easier for them to access various financial services.

Q: How did Synapse decide which services to build themselves and which to partner with?

Synapse decided to build most of the services in-house to have more flexibility and control. They only partner with companies where no tri-party agreements are needed, making it easier to manage all aspects of their infrastructure.

Takeaways

Synapse aims to make financial services more accessible and inclusive. By partnering with banks and offering a comprehensive range of services, they help fintech startups reduce their barrier to entry and get to market faster. Synapse differentiates itself by providing speed, accessibility, and support to its customers. They also focus on automation and building their services in-house to have more control and flexibility. Overall, Synapse is working towards creating a more inclusive banking infrastructure that works for all customers.

Summary & Key Takeaways

• The founding story of Synapse revolves around the CEO's personal experience of facing difficulties in opening a bank account as an immigrant in the US, leading him to create a more inclusive banking infrastructure.

• Synapse aims to democratize financial access by providing modular and comprehensive banking infrastructure for fintechs, allowing them to offer innovative and accessible financial products.

• The barriers to entry for fintech companies include obtaining banking partnerships, ensuring compliance with regulations, and establishing the necessary processing layers for payment, card issuance, and other banking functions.