Embedded banking firm Treasury Prime is cutting staff amid a new shift in strategy.
“For years, we’ve been saying that the future of banking is embedded, with regulated institutions and technology firms working closely together to deliver critical financial services within new channels and apps,” CEO Chris Dean wrote on the company blog Wednesday (Feb. 28).
“However, it’s become increasingly clear to me that the future of embedded banking is through bank-direct, fintech partnerships. The market is settling on this model, and it’s happening fast.”
As such, Treasury Prime is rolling out a “Bank-Direct” product, which lets banks handle the entirety of their relationships with FinTech clients, and which will lead to “some significant changes,” to the company, Dean added.
Among those changes will be the departure of “some very talented people,” he wrote, with other employees moved to different parts of the company.
It was not immediately clear how many employees the changes would affect. In a post on LinkedIn, FinTech Business Weekly’s Jason Mikula wrote that “multiple sources” had told him that Treasury Prime had laid off almost half its employees.
Reached for comment by PYMNTS, a company spokesperson provided a statement that said the cuts would affect “a meaningful number of incredibly talented employees that were dedicated to the fintech-direct business line,” without mentioning specific numbers.
“Over time, we also expect to bring on additional staff with relevant expertise focused on the bank-direct strategy,” the statement added.
The company said in a news release that while it will continue providing support for users of its Banking-as-a-Service (BaaS) operating system, it will now focus its sales efforts and software development to let banks “directly sell and serve fintechs and other embedded banking brands.”
Treasury Prime says this approach is in response to a shift in the marketplace, as banks look for BaaS operating systems that support their in-house business development capabilities.
“Meanwhile, regulators are calling for more rigorous oversight and compliance, and have made it clear that banking institutions — not intermediaries — are best positioned to manage the fintech customer relationship,” the company wrote.
Among these regulators is Michael Hsu, acting Comptroller of the Currency, who addressed the need for greater oversight into bank-FinTech relationships in a speech last week.
“From a bank regulatory, micro-prudential perspective, our focus during this period must be to ensure that bank safety and soundness is maintained, consumers are protected and the playing field is level,” Hsu told an audience at Vanderbilt University.
Research by PYMNTS Intelligence has found an increasing level of cooperation between banks and FinTechs, with 65% of banks and credit unions saying they have entered into at least one partnership with a FinTech in the prior three years.
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