Treasury Prime, a BaaS platform backed by fintech heavyweight QED Investors, has laid off about half the company, multiple sources tell me: The move comes amidst ongoing turmoil in the banking-as-a-service space. Treasury Prime's most recent fundraise was its $40 million Series C, announced in February 2023. But, in the year since then, a LOT has changed (and continues to change) in BaaS. Treasury Prime reportedly has struggled with high churn, leading some potential investors to balk at putting money into the company in the current environment. With regulators zeroing in on how banks identify, diligence, onboard, and monitor fintechs, many banks increasingly want to have direct control and visibility over these functions and processes. Historically, Treasury Prime generated demand by marketing to FINTECHS and then matching them to a bank partner who would then use Treasury Prime's platform - a sort of "matchmaker" or broker-type role. Now, Treasury Prime will focus on selling software to BANKS, and wind down its efforts to sell to fintechs. As a result of the strategy pivot, Treasury Prime laid off entire teams supporting fintech sales, including marketing and sales, sources told me. Other teams also saw headcount reductions. Treasury Prime is expected to make a public statement on the matter later today. #fintechnews #breakingnews #banking
Tarique Khan
2mo
Having been through it myself, selling to banks takes much work. The problems you encounter with fintech are replaced by different and more complex challenges when dealing with banks. Moreover, it's essential for them and their investors to remain patient due to the extended sales cycle—no shortcuts in fintech.
Nathan Solmose
2mo
You post the most insightful fintech insights! Thank you Jason Mikula
Susan French
2mo
Frankly, I'm not surprised. Given that partner banks will be absorbing more costs and time associated with due diligence, risk management, and compliance responsibilities, it's not surprising that partner banks would be reassessing the economics of the BaaS middleware approach. If the problem of having/managing/operating the required technology could be whitelabeled and outsourced in a reasonable way, it would not surprise me that more current and would be partner banks would be considering the direct-to-fintech model. If they own all the compliance responsibilities, and they can solve for the technology platform, all that's left is learning how to market and sell to fintechs (which costs money but is a learnable skill).
Arcady Lapiro
2mo
I posted a year ago about my thoughts about the future of Baas and that the future was to power banks and credit unions in their embedded fintech strategy and how Agora (Financial Technologies formerly Agora Services) differs, see here https://www.linkedin.com/posts/arcadylapiro_ai-tech-automation-activity-7168602808185778176-fpT-?utm_source=share&utm_medium=member_desktop
Keith Daly
2mo
Wow - is middleware dying?
Greg Boch
2mo
This is a significant change of strategy for Treasury Prime. The move from working with fintech companies to focusing on selling software to banks is a strategic move that probably reflects the current challenges and demands in the financial services industry. Despite this, laying off a significant number of employees is always a difficult decision and I hope that the company can successfully adapt to the new environment and continue to grow.
While tough to swallow, I think this is a good pivot for the industry. Incentives should be better aligned when BaaS sells to banks directly. It may be tougher for fintech startups to get rolling with banking products in this business model, but the extra hurdle of having to partner directly with the bank might weed out a lot fintech tourists.
Holistic Compliance Leader | Chief Compliance Officer | Mother of Patents | Financial Crime Overlord | Risk Optimizer | Providing Clarity and Creating Solutions | (opinions posted are personal)
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