Jul 12, 2019, 11:00 AM ETInterview, Fireside Chat

Founding Stories: Synapse

Founding origin: CEO Sanket Patak was denied a bank account in the US due to his status as an international student lacking a Social Security Number, forcing him to physically visit a branch to open an account.
Pain point realization: Patak identified that "branchless" fintechs like Simple could not bypass legacy banking infrastructure requirements, such as in-person verification for suspicious activity or specific identity document validation for immigrants.
Strategic pivot: Initially aimed to build a consumer-facing bank similar to Simple, the company pivoted to building "the Google for banking" infrastructure after partner banks refused to support his proposed identity verification and underwriting capabilities.
Core mission: The goal is to democratize financial access by creating a modular infrastructure stack that serves immigrants, unbanked individuals, and those without credit history, rather than forcing them to rely on non-inclusive legacy systems.

Licensing constraints: Regulators (Fed, OCC) rarely approve new bank charters post-recession; new entrants must typically secure a "sponsor bank" partnership to move money or offer loans.
Capital requirements: New banks face restricted status for the first two years, requiring significant capital reserves (e.g., 10% collateral on deposits) and limiting wire transfer capabilities.
Compliance complexity: Launching a fintech requires navigating a web of regulations including the Patriot Act, Bank Secrecy Act, and CFPB oversight, often necessitating 18–24 months of development and partnership negotiations.
Risk allocation: Banks bear the primary regulatory risk for their fintech partners; if a partner commits deceptive marketing (UDAP) or fails AML checks, the regulator can penalize the bank, potentially forcing the bank to exit the partnership.

Centralized compliance: Synapse aggregates compliance, KYC, and AML functions across multiple fintech clients to standardize processes, reducing the operational burden on both banks and startups.
Technology automation: The company replaces manual compliance roles (which have grown to 15% of bank workforces, e.g., Citi) with automated systems, claiming 80–90% automation rates for identity verification and transaction monitoring using computer vision and AI models.
"Autopilot" oversight: The model relies on automated systems for routine monitoring with human intervention reserved for detecting deficiencies, allowing for scalability without linear headcount growth.
Product scope: Synapse provides a one-stop shop for banking partnerships, compliance automation, and processing layers including ACH, card issuance, remote deposit capture, and check issuance.

Non-fintech entrants: Traditional non-fintech companies (e.g., Lyft, Uber) are increasingly launching their own financial products to capture high-margin revenue streams and improve user experience without heavy infrastructure costs.
Competitive pressure: Increased competition driven by lower barriers to entry is expected to drive higher interest rates and better terms even for well-served customers who currently rely on premium banking products.
Market examples:
- Dave: Successfully addresses the demand for overdraft protection by monitoring accounts and preventing fees, serving a customer base previously ignored by traditional lenders.
- Empower: Offers competitive yields (approx. 2.15%) and robust user interfaces, rapidly matching or surpassing early neobanks like Chime.
- Mercury: Demonstrates the viability of serving startups and SMBs with integrated cash flow management and accounting tools.
Future potential: Easier infrastructure is expected to enable niche products for specific demographics, such as food stamp management (Propel) and credit-building for young graduates without credit history.

Customer acquisition strategy: Synapse initially overcame the "new player" hurdle by emphasizing speed, guaranteed access, and high-touch Slack support to clients who needed to launch rapidly.
One-stop shop model: The company manages all third-party approvals (Visa, banks) behind a single agreement to eliminate tri-party complexity for its customers.
Founder transition: Sanket Patak identified the shift from technical contributor (coding) to executive leadership (communication and team editing) as the most significant and difficult challenge for a technical founder.
Public roadmap strategy: Synapse publishes its product roadmap to set clear expectations for customers, incentivize internal execution, and solicit feedback from a growing client base.