With the rise of fintech, the traditional banking industry has been forced to adapt and evolve, giving birth to innovative companies like Synctera. However, even in a thriving market, challenges arise and difficult decisions must be made.
Synctera, a promising banking-as-a-service startup, recently confirmed to TechCrunch that it has undergone a restructuring resulting in a reduction in staff. While the company declined to disclose the exact number of employees affected, reports suggest around 15% of their workforce, or approximately 17 people, were let go. This brings their current employee count to roughly 96, down from 113 prior to the cuts.
This change comes on the heels of Synctera’s successful $18.6 million extension of their Series A funding, which they announced in March of 2023. Along with this round of funding, the company also welcomed Leigh Gross as their new Chief Revenue Officer and added BTG Pactual and Flutterwave to their list of customers.
Among Synctera’s notable investors are NAventures, the corporate venture arm of National Bank of Canada, Lightspeed Venture Partners, Fin Capital, Banco Popular, and Mana Ventures.
When reached for comment about the layoffs, a company spokesperson stated: “Synctera has conducted a restructuring of the company that resulted in a reduction in staff and we are dedicated to assisting those who are impacted. We are committed to our current line of business along with the addition of SaaS offerings for banks and companies.”
Unfortunately, Synctera is not alone in having to resort to downsizing amidst the current market climate. In February, Treasury Prime cut their workforce in half, down to 50 employees, just a year after raising $40 million in their Series C round. Additionally, Synapse, backed by venture capital firm Andreessen Horowitz, confirmed last October that they had laid off 86 employees, equating to 40% of their staff. In July of last year, Figure Technologies, which includes Figure Pay, let go of 90 employees, approximately 20% of their workforce.
And it’s not just startups feeling the impact of the economic landscape. According to a report by FinTech Business, Piermont Bank has severed ties with fellow fintech startup Unit.
“BaaS” encompasses a variety of business models. This can include providing bank-like services to other players in the industry, offering charter and bank services without underwriting, or offering banking components that act as a fintech but without a charter.
Not surprisingly, these BaaS players have faced their fair share of challenges, particularly with regulatory crackdowns in 2023. In fact, according to S&P Global Market Intelligence, over 13% of severe enforcement actions from federal bank regulators last year were directed towards companies providing BaaS to fintech partners. As a result, these startups may find themselves having to make tough decisions, such as layoffs, in order to stay afloat.
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“With the rise of fintech, the traditional banking industry has been forced to adapt and evolve, giving birth to innovative companies like Synctera.”
Challenges Facing BaaS Players
- Facing regulatory crackdowns in 2023
- Providing BaaS to fintech partners accounted for over 13% of severe enforcement actions from federal bank regulators last year
All in all, despite the challenges, the future of BaaS remains bright, as it continues to revolutionize the traditional banking landscape.
