Among the growing number of banking-as-a-service companies, Treasury Prime supports both banks and fintech companies in their efforts to build account and payments solutions.
“You can assemble the Lego bricks however you want,” explained CEO Chris Dean. “Everything that you would do at a bank on the deposit side, we can do that, and part of the reason we can do that is because for some portion of [our client] banks, we run the deposit operations for them.”
Founded in 2017, Treasury Prime partners with Pacific Western Bank, Piermont Bank, and LendingClub Bank (formerly Radius Bank). It works with more than 50 fintech startups to help build deposit functions, account opening, payments and cards. Its fintech clients include MaxMyInterest, which provides cash management solutions for financial advisers, their clients and banks; Zeta, a shared banking app for families; and ZenBusiness, a small business platform that acquired neobank Joust last year.
Last week, Treasury Prime raised $20 million in Series B funding, which the company said will “accelerate go-to-market programs and to expand the company’s sales, marketing, and engineering teams.”
As the banking-as-a-service market expands to include both “embedded finance” and “embedded fintech” offerings, Treasury Prime’s sweet spot is playing both sides of the coin. It also helps fintechs and banks find compatible partnerships, enabling client banks to develop one-on-one relationships with fintechs.
“It’s very typical for the lifecycle of a bank for us to start out with them. We’ll usually help them do some deposit operation things, and then we will bring them fintechs, and we will show them how to onboard them,” said Dean.
New York-based Piermont Bank, established in 2019 and with more than $250 million in assets, began partnering with Treasury Prime last year to support its burgeoning BaaS business. It currently offers client fintechs deposit accounts, Automated Clearing House (ACH) and wire payments, and debit cards through the technology partnership with Treasury Prime.
Rodrigo Suarez, Piermont’s head of innovation, told FinLedger Treasury Prime was a logical partner because of its technology suite and role in facilitating one-on-one relationships between banks and fintechs. This stands in contrast to some of its competitors that pitch fintechs a comprehensive BaaS offering with little or no need to contact the partner bank.
“Our vision of what makes a successful bank-fintech partnership is aligned,” said Suarez. “Treasury Prime understands that a direct and active relationship between bank and fintech is important for a long-term sustainable BaaS partnership.” Treasury Prime’s API toolset allows for quick onboarding with client fintechs, reducing integration times from months to weeks, he added.
FinLedger spoke with Dean about the company’s business model and client strategy. Answers have been edited for clarity.
You work with a network of banks to be able to help fintechs deliver various products. What types of fintech clients do you have?
Anything a bank can do on the deposit side, we can do. We want to enable fintechs to be able to do that. On one side the most complex are the commercial neobanks, where it’s the bank account for [a] business where they run all their business operations on top of it, and all the way at the other end is just doing payments. About 25% [fintech clients] are neobanks, about a third are what we would call simple payments and the remainder are generally flow-of-funds apps.
For a fintech startup, what is the advantage of working with you?
[For example], you have a retail [neobank] with a personal bank account product where the balances are very low. The incentives for the bank are well, they’re not probably going to get a lot of deposits, so they want to get the fees. However, the only way the fintech can make money is when they have hundreds of thousands of accounts.
We can find them a bank where the tech [company] and the bank’s needs match, and we have technology to make the pricing work out for everyone.
Why should banks partner with you?
Banks run on very antiquated software. We automate their deposit operations so it’s more efficient for them to do that. But the main thing we do these days is we act as a channel for new clients. The fintech clients are interesting, but generally banks do not know how to talk to a fintech, and the tooling they have to do that is generally not very good.
Your two-sided model is a differentiator. How would you describe it?
A way to think about us is as a ride-sharing service like Uber: you have passengers on one side and drivers on the other. If you had lots of passengers but no drivers, passengers would be unhappy, and the reverse would also be true. And we have the same thing, lots of passengers – that is, lots of fintechs – and enough drivers that are banks. We match them up to each other.
How do you make money?
We’re a software company like Twilio or AWS. We have a usage-based model. [For example] you open a bank account, we charge you $2, and if you send an ACH, we charge you a few pennies.
How do you explain your double-digit percentage revenue monthly growth?
It’s probably just the pandemic story that happened in so many other places. Traditionally, banks have been reluctant to turn on fintech because it’s been an expensive and slow process. The pandemic happened … and the banks realized, ‘Hey, maybe doing things remotely is okay, and maybe I don’t need tellers.’ Our phone started ringing off the hook.
I understand that existing investors (“insiders”), including Deciens Capital and QED Investors led the recent Series B funding round. Can you unpack how that process went?
Our insiders know our business better than anyone else. We had a lot of interest [with] multiple term sheets, but our insiders won because they know the business better than anyone else.
What’s next for the BaaS space?
You can see a tsunami of leads from fintechs coming down the road right now. It is my belief that five to ten years from now, every significant business is going to have a fintech aspect to it, just in the same way that every significant business now has some sort of internet access component to it.
What keeps you up at night?
I tend to worry about the established players finally waking up. There’s some sleeping giants here, including the FIS’s of the world. These are large companies that have existing relationships with thousands of banks and hundreds of millions of end users.