Synapse BaaS Platform Slated for Bankruptcy Sale

The assets of bankrupt Banking-as-a-Service (BaaS) provider Synapse are going up for sale next month.

B Riley Advisory Services, the group handling the sale, announced Friday (Oct. 25) a pair of deadlines for interest bidders: Nov. 4, 4 p.m. PT for initial indications of interest, and Nov. 11, 4 p.m. PT, for initial bids.

Up for sale are Synapse’s BaaS platform and intellectual property, as well as equity interests in the company’s subsidiaries, Synapse Credit and Synapse Brokerage, plus other assets as determined by the company’s bankruptcy trustee.

According to a news release, Synapse’s Fall 2023 literature showed that its platform served around 120 FinTech customers, had 2 million active users, $60 billion in annualized money movements and $3 billion in card-based spending.

Synapse, a middleware firm whose services let other businesses embed banking services into their offerings, collapsed earlier this year, sending shockwaves through the FinTech world.

As reported here, the company’s troubles began — or at least came to light — when Synapse’s biggest customer, Mercury, chose to work directly with Evolve Bank & Trust, Synapse’s core banking partner, thus eliminating the need for Synapse as an intermediary.

“That set off a chain of events, few of them good, for Synapse’s other clients who relied on the FinTech provider as their connective tissue,” PYMNTS wrote.

As covered here in May, this sort of collapse can present some difficulties at a time when — per PYMNTS Intelligence research — 65% of banks and credit unions have launched at least one FinTech partnership in the past three years, with 76% of banks seeing such collaborations as essential to meeting customer expectations.

“With complex ecosystems, you have a higher number of partners than you may have historically had” in the past,  Larson McNeil, co-head of marketplaces and digital ecosystems at J.P. Morgan Payments, said in an interview with PYMNTS.

McNeil added, “you’ve got to understand your industry and the various players in the ecosystem — and as complexity increases, you’ve got to understand the risk and the opportunities that this creates for the business.”

Meanwhile, Evolve announced last week that it expects to begin returning funds it holds to Synapse Brokerage end users affected by the Synapse bankruptcy in November.

The company has launched a website that provides these end users information about the reconciliation process and the process to disburse end user balances held by Evolve since  Synapse declared bankruptcy. Customers will be notified via email about the next steps in the process on Nov. 4.