Lex is interviewing Sankaet Pathak, the former CEO and founder of Synapse, and CEO and current founder of Foundation, to explore what happened with Synapse, the banking as a service industry, and key lessons learned. The discussion covers Synapse's origins, the reliance on bank partners like Evolve, the discovery of reconciliation issues and missing payments, and the eventual sale of Synapse to TabaPay. Pathak shares details on the various categories of "breaks" they uncovered, including debits from customer accounts, undisclosed fees, and the challenges around the Mercury migration. The episode also touches on potential regulatory oversights, the role of blockchain technology, and Pathak's perspective on his critics. The summary provides a comprehensive overview of the issues faced by Synapse and the broader implications for the banking infrastructure space.
MENTIONED IN THE CONVERSATION
Topics: BaaS, API, Open Banking, payments, banking, Fintech, Embedded Finance, regulation
Tags: Synapse, Foundation, Evolve Bank, Mercury Bank, TabaPay, Yotta, FDIC
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TIMESTAMPS
1’06: Synapse and the Evolution of Banking-as-a-Service: Sankaet Pathak’s introduction
3’26: The Synapse Story: Inside the Banking Infrastructure and Its Collapse
6’17: Behind the Rise and Reliance: How Evolve Bank Became Synapse’s Key Partner
9’16: Uncovering Reconciliation Issues: How Synapse Detected Problems with Evolve Bank
11’05: Tracking Customer Funds: How Synapse Managed User-Level Data with Pooled Bank Accounts
14’41: Uncovering Payment Breaks and Fee Issues: The Challenges Synapse Faced with Evolve Bank
21’16: Tracing Missing Funds: Synapse’s Financial Breakdowns and Evolve Bank’s Alleged Deception
24’44: From Billion-Dollar Valuation to Fire Sale: The Synapse Collapse and TabaPay Deal
29’04: Missing Millions: How a Migration Error with Mercury Led to a $49 Million Discrepancy
33’37: Lessons from Synapse’s Collapse: Reflecting on What Could Have Been Done Differently
39’10: Reflecting on Mistakes: Scaling Too Fast and the Complexities of Synapse’s Brokerage Service
43’11: Rethinking Financial Oversight: The Need for Bank Accountability and Direct Regulation of Bank-Adjacent Companies
45’59: Addressing the Critics: Sankaet Pathak on Misunderstandings and Missed Opportunities in the Synapse Collapse
Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.
Contributors: Lex, Laurence, Matt, Farhad, Mike, Daniella
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