Nearly a year after the FDIC proposed its “Synapse Rule,” operations leaders have stopped waiting for regulatory clarity and built their own resilience standards.
It’s been almost 12 months since the FDIC proposed new rules requiring banks to maintain daily reconciliation of custodial deposit accounts, the so-called “Synapse Rule” born from last year’s spectacular fintech collapse. With the Trump Administration signaling deregulation and the rule’s future uncertain, many expected the banking as a service industry to wait and see.
Despite this, operations leaders have moved decisively, building the next generation of bank-fintech partnerships designed to withstand scrutiny regardless of what Washington decides.
What Changed While We Waited
The Synapse collapse in April 2024 forced a fundamental shift in how banking as a service partnerships operate. Banks and fintechs that previously relied on intermediaries to handle operational oversight now demand direct visibility into reconciliation processes. What was once acceptable – end-of-day reporting and manual exception handling – no longer meets the standard.
But while the industry waited for the FDIC’s proposed daily reconciliation requirements to become final, market forces moved faster than regulators. Synapse Rule or no Synapse Rule, the operational imperatives became clear: real-time reconciliation, transparent reporting, and comprehensive audit trails.
What Operations Leaders Are Actually Doing
1. Building Direct Bank Relationships
The middleware model that defined early banking as a service is evolving. As Jason Mikula of Fintech Business Weekly notes, “having the middleware player have program management responsibility is just not workable” given current incentive structures. Operations teams are increasingly seeking direct partnerships with banks, cutting out intermediaries where possible.
2. Implementing After-Synapse Controls
Even without formal regulations, leading firms are adopting daily reconciliation standards. This isn’t just about compliance—it’s about operational resilience. According to Phil Goldfeder of the American Fintech Council: “The fundamental responsibility of the bank partnering with a fintech company is reconciliation and ensuring that they know what money is coming and going.”
3. Stress-Testing Partnership Models
The banking as a service market is maturing rapidly. According to data from Mordor Intelligence, the banking as a service market is expected to reach $21.90 billion by 2030, growing at a compound annual growth rate (CAGR) of 26.6 percent. Operations leaders are evaluating partners not just for today’s needs, but for tomorrow’s scale and regulatory environment.
Operational Reconciliation is the Make-or-Break Factor
According to research from McKinsey & Co., more than two-thirds of banks have undergone the digital transformation and modernization necessary to be competitive in banking as a service, but operational reconciliation remains the critical differentiator. Research from Deloitte indicates that banks are struggling to control costs, with total noninterest expenses outpacing net revenue growth for banks with more than $10 billion in assets.
Banking as a service providers enable non-banks to offer financial services without building entire banking systems from scratch, but this creates reconciliation complexity that manual processes simply cannot handle.
The most successful BaaS programs share three operational characteristics:
- Real-time data visibility: No more waiting for end-of-day reports
- Automated exception handling: Human intervention only for genuine anomalies
- Audit-ready documentation: Every transaction traceable from initiation to settlement
Looking Forward: Embedded Finance and Beyond
According to research from McKinsey & Co., embedded finance and banking as a service were among the most resilient fintech segments in 2024, with funding declining only 24 percent to 26 percent compared to 50 percent drops in other areas. McKinsey projects that banking as a service revenue could grow three to 30 times in the next decade, making it one of five key competitive arenas reshaping banking.
But embedded finance demands even tighter operational controls than traditional banking as a service models. Research from Deloitte’s 2025 banking outlook shows that banks are accelerating adoption of automation and machine learning tools to digitize manual processes, with large language models freeing up resources for value-added interactions.
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