Financial Services

The Business of Partnership: BaaS and Fintech

Why BaaS banks and fintechs succeed or fail together, and the playbook for planning a durable partnership.

By Sarah Garland · August 19, 2026

Introduction

Banking-as-a-Service (BaaS) banks and fintechs see a significant opportunity in the evolving financial services ecosystem. However, realizing the full value of the BaaS-fintech business model can be challenging, such as data limitations, risk and compliance complexities, and differing expectations on accountability and operational execution. By forming transformative partnerships, BaaS providers and fintech companies can work together to modernize legacy banking infrastructure, replace outdated technology stacks, and accelerate digital innovation. These collaborations enable banks to offer embedded financial products more efficiently while allowing fintechs to deliver seamless, customer-centric experiences. Through improved connectivity, personalized services, and streamlined onboarding processes, BaaS banks and fintechs are reshaping how consumers and businesses interact with financial services, ultimately enhancing customer satisfaction and driving growth for both partners.

The Foundation of BaaS Success: Plan, Partner, and Prosper

The Banking-as-a-Service (BaaS) and fintech relationship is built on more than just a contractual agreement. At its core, it is a strategic partnership founded on collaboration, transparency, knowledge sharing, and a shared commitment to delivering value and security to customers. For these partnerships to thrive, both organizations must align on goals, expectations, risk management practices, and what success looks like for the relationship.

Successful BaaS banks and fintechs recognize that sustainable growth is achieved when both parties invest in each other's success. This requires open communication, mutual trust, and a willingness to work together through challenges and opportunities. Beyond providing technology, compliance oversight, or financial products, both partners must actively contribute expertise, insights, and innovation to strengthen the relationship and improve outcomes for end users.

A true partnership mindset means moving beyond a vendor/client dynamic and embracing a shared vision. When the BaaS bank succeeds in safely scaling its platform, maintaining regulatory compliance, and expanding its reach, the fintech benefits through increased growth opportunities, enhanced customer experiences, and accelerated innovation. Likewise, when the fintech successfully acquires and serves customers, develops compelling products, and grows its business, the BaaS bank benefits from greater transaction volume, stronger program performance, and expanded market presence.

Ultimately, the most effective BaaS partnerships operate with the understanding that success is interconnected. Both organizations share responsibility for achieving business objectives, managing risk, and creating exceptional customer experiences. When the BaaS bank is successful, the fintech is successful; and when the fintech succeeds, the BaaS bank succeeds. This alignment creates a foundation for long-term growth, resilience, and innovation in an increasingly competitive financial services landscape.

With Opportunity Comes Potential Challenges

While BaaS partnerships create significant opportunities for innovation, growth, and expanded financial access, they also introduce a unique set of operational, regulatory, and strategic challenges. The success of a BaaS bank and fintech relationship depends on strong governance, clear communication, well-defined responsibilities, and effective data management and governance. When these foundational elements are missing, both parties can face increased costs, compliance risks, operational inefficiencies, and regulatory scrutiny. The following challenges highlight some of the most common obstacles that can hinder the success of BaaS and fintech partnerships and underscore the importance of establishing a collaborative, transparent, and well-governed operating model from the onset.

Lack of communication or fragmented communication channels leads to delayed or incorrect decisioning, duplicate effort, and higher risk of mistakes leading to regulatory scrutiny.
The data needed for reconciliations, transaction monitoring and OFAC screening is often unstructured, incomplete, inaccurate or not available.
The ability to exchange data and information proves difficult for both parties, whether it is the size of data that needs to be shared or the sensitivity of the information.
BaaS banks may be uninformed of what it means from a regulatory and reconciliation perspective to enter the BaaS/fintech partnership, including cost, regulation, technology, data volumes and data governance.
Conversely, fintechs may not have the working knowledge of the banking regulatory environment because they sit outside federal regulatory reach. Asks from BaaS banks to remediate issues may seem overwhelming or unnecessary from a fintech perspective.
There is often little to no documentation of products and services in the BaaS/fintech partnership workflow, impacting the data requirements, transaction monitoring tuning and rules generation, and risk profiles for the fintech. These issues have a high regulatory impact.
Speaking of risk profiles, BaaS banks often lack or do not maintain risk profiles and the associated data for each fintech which can result in a higher cost to maintain the fintech partnership or additional regulatory scrutiny.
Both parties may forgo opportunities to commercialize products and services to cover technology, process and people costs to meet regulatory obligations and support continued expansion of banking products and services. This can lead budgetary impacts that may delay remediation or innovation.
Organizational structure including roles and responsibilities and technology of BaaS banks and fintechs may be insufficient to support the BaaS/fintech partnership.
And finally, consent orders, cease and desist orders and/or fines may be looming for BaaS banks and fintechs, which is a no-win situation for both parties.

That's a long list of challenges, and the potential impact can be significant and may lead to regulatory issues, look backs or fines. From regulatory action and operational disruption to customer harm and loss of a sponsoring bank relationship, the consequences can affect everyone involved. The good news is that these issues are largely preventable or fixable when BaaS banks and fintechs commit to collaboration, alignment, and shared accountability, with a common focus on protecting customers and building a sustainable partnership.

The Solution: Plan Together, Succeed Together

Successfully scaling a BaaS and fintech partnership requires more than technology and compliance. It demands a deliberate strategy built on communication, data, governance, risk management, and operational alignment. By establishing clear communication channels, defining data requirements, developing fintech-specific risk profiles, and creating actionable roadmaps, both parties can proactively address challenges before they become regulatory, financial or operational concerns. Equally important is ensuring the right organizational structure, skills, and financial models are in place to support growth. Together, these practices create a framework for stronger partnerships, improved customer outcomes, enhanced regulatory readiness, and long-term, sustainable success.

Build, align and deploy a communication plan. Both parties should identify key points of contact, including those with authority and owners of processes and technology. Agree on communication channels, such as email, chat, and meetings. Ensure subject matter experts and owners for both parties are identified and engaged to help inform and drive quick decisioning.
BaaS banks must have clear, defined data requirements to support regulatory workflows, such as transaction monitoring, OFAC screening, and FBO reconciliations. These data requirements must be shared with the fintech partner, ideally at the time of entering the relationship, to ensure alignment and an established go forward process for the fintech to deliver the data.
- Customer > Account > Transaction data must be linked
- For BaaS banks, the fintech must have a unique identifier
BaaS banks and fintechs must have strong data infrastructure and governance to support the high volume of customer, account and transaction data.
BaaS banks must create a third-party risk management program for vendors and fintech partners incorporating attributes such as products and services, customer demographic, transaction types, geography, and transaction dollars and volume. These must be updated and maintained.
Create a portfolio of work and roadmap with actionable, executable plans, including timelines for delivery. There may be multiple roadmaps, 90-day, 6-month, 12+ months out to track progress for both parties. Identify the issues, prioritize the issues based on severity or need, and align on what a successful outcome looks like. Maintain and track progress against your portfolio of work. It is highly recommended a Program Manager leads these initiatives, or a Portfolio Manager for larger, more complex portfolios of work.
Assess the current state organizational structure and skills set within both organizations. Ensure the right people are in the right roles, and the right roles are in place to support the BaaS/fintech relationship.
Develop criteria to evaluate the risk/reward profile of partnerships, products, and services to ensure sustainable growth and regulatory compliance.
Understand the unit cost of each product, service, and relationship in the partnership and identify potential opportunities to monetize products and services. This helps both parties with financial planning, including annual budget preparation and large project proposals requiring financial approval.

Conclusion: Partnership Is the Foundation of BaaS/Fintech Success

The Banking-as-a-Service ecosystem presents tremendous opportunities for banks and fintechs to innovate, grow, and deliver exceptional customer experiences. However, success is not guaranteed. As highlighted throughout these challenges, many BaaS partnerships struggle with communication gaps, data quality issues, unclear responsibilities, inadequate risk management, insufficient governance, and misaligned expectations. Left unaddressed, these challenges can lead to operational inefficiencies, increased costs, regulatory scrutiny, damaged customer trust, and, in extreme cases, the failure of the partnership itself.

The good news is these challenges are both identifiable and addressable. Successful BaaS partnerships are built on a foundation of transparency, collaboration, and shared accountability. By establishing clear communication plans, defining data requirements, developing fintech-specific risk profiles, creating actionable roadmaps, aligning organizational structures, and understanding the economics of the partnership, both parties can proactively mitigate risk while enabling sustainable growth.

Most importantly, BaaS banks and fintechs must embrace a true partnership mindset. Regulatory compliance, operational excellence, customer protection, and commercial success are shared responsibilities. When both parties are aligned on goals, committed to solving problems together, and focused on delivering value to customers, the partnership becomes stronger, more resilient, and better positioned to navigate the complexities of the regulatory and competitive landscape.

Ultimately, the most successful BaaS partnerships recognize a simple truth: when the bank succeeds, the fintech succeeds; when the fintech succeeds, the bank succeeds; and when both succeed, the customer wins. This shared commitment to partnership, planning, and execution is the key to long-term success in the evolving BaaS ecosystem.

For more information about how Teleion can help support your BaaS/fintech partnership execution, please visit Financial Services.

About the author

Sarah Garland

Offering more than two decades of experience in the financial services industry, Sarah Garland is a seasoned professional with deep expertise delivering successful outcomes across multiple financial services verticals. Sarah is a results-driven leader with strengths spanning risk management, payments, treasury, systems solutions, operations, and organizational strategy. With the ability to operate effectively in complex and high-stakes environments, she consistently delivers results for organizations undergoing significant change, including those in transition or under regulatory remediation.

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