A new industry association has been set up specifically targeting the growing banking-as-a-service (BaaS) sector.
Ohio-based Sutton Bank and the community banking platform Bankers Helping Bankers (BHB) have joined forces to create the BHB BaaS Association to serve “the unique needs of BaaS sponsor banks”, the groups said in a joint statement.
Tanner Mayo, BHB co-founder, said: “It is essential that banks getting into this space do so in a safe, sound, and regulatory compliant way. This association is intended to help them embrace the opportunities of BaaS, while proactively identifying and mitigating risks.”
The association will help co-ordinate and advocate with legislators and regulators, as well as promote best practices and standards for the delivery of BaaS to non-banks.
It said it would also seek to build a community of bankers and other industry participants to share experiences and insights.
The BaaS Association will also connect federally-insured financial institutions to fintech technology partners that can help them to facilitate a successful BaaS program.
Robert Keil, chief payments officer at Sutton Bank, said: “Community banking is experiencing a number of challenges. Banking-as-a-service is one offering that enables banks to generate alternative revenue and predictable fee income.
“Furthermore, by partnering with select fintech organizations, smaller community banks are able to offer banking services to large numbers of the unbanked and underbanked population.
“Having an association for banks active in this space will only help to continue the momentum and further strengthen consumers and community banking alike.”
A 2020 report from research group Forrester identified BaaS as one of the key areas in which banks would have to compete in future as digitalization spread across the industry.