The banking-as-a-service space was the topic of discussion for Q2 Open Banking vice president of strategic solutions Rahm McDaniel's fireside chat Tuesday at the Benzinga Global Fintech Awards.
McDaniel was joined by Benzinga's Luke Jacobi, and the two discussed several pressing topics in the space.
Portability is vital to a BaaS offering, McDaniel said. He told Jacobi that when fintech companies accrue significant value and customers, it may necessitate a move to a new bank.
A company must provide a mechanism for portability, McDaniel said.
If not, "I would argue that they're not really banking as a service offering," he said.
The two discussed the trend of startups providing a single banking prop, such as a checking account. Jacobi asked McDaniel about the ability of such companies to become a primary financial institution for their customers.
"Everybody's talking about that," McDaniel said, calling it a "rebundling" that starts with one product that leads to customer acquisitions before the offering is bundled out.
"The ones that have really gone after that are having some success where they are able to acquire the direct deposit relationship from the paycheck," McDaniel said.
"I'm not saying everything starts there. I'm saying that is a good place for the fintechs to start."
Photo by Mandar Parab.