Banks Rework BaaS to Boost Deposits and Fees
Banking-as-a-service lets regulated banks distribute deposit accounts, payments and compliance services through FinTech partners, turning third-party reach into funding and fee income. The model also creates oversight challenges: the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have flagged fragmented operations, inadequate bank access to deposit and transaction records, and reliance on outside providers for compliance. Banks remain accountable for legal and regulatory obligations.
Second-quarter results summarized on Sept. 3 showed Fifth Third’s Newline added $2.1 billion in deposits while fee revenue rose 35% from a year earlier. The Bancorp said FinTech partnerships generated 96% of deposits; average deposits reached $8.41 billion and FinTech fees rose to $40.9 million. First Internet Bank reported a 172% jump in BaaS fee revenue while routing about $2.4 billion of FinTech deposits to a deposit network. Separately, FV Bank launched Global Managed Accounts on Aug. 26, retaining KYC, KYB and transaction-monitoring duties.
All Coverage
1 original reportsThe Backstory
The history behind this eventSponsor Banks Turn Fintech Deposits Into Fee Growth
Sponsor banks provide the regulated deposit accounts, payment rails and compliance infrastructure that allow fintech companies to offer banking products without their own charters. As Banking-as-a-Service expands, those deposits are becoming more than a static funding source. Banks can retain them, move eligible balances off their balance sheets or use them to replace costlier funding, while generating noninterest revenue from transaction processing and program services.
At March 31, 2025, First Internet Bank held $881 million in fintech-partner deposits, up 37% from the previous quarter, after processing nearly $23 billion of payments during the quarter. Its BaaS revenue reached $1.1 million, already more than half the $2 million generated in all of 2024. The Bancorp’s average Fintech Solutions deposits rose 26% year on year to $7.81 billion, while prepaid, debit-card, ACH and other payment fees increased 13% to $30.8 million. The Bancorp said it can transfer deposits from certain relationships off its balance sheet.
Banks Tap FinTech Partnerships to Boost Deposits and Fees
Embedded finance allows companies to offer deposits and payments within their own platforms while licensed banks provide the regulated infrastructure behind them. The model gives lenders access to customers beyond traditional branches and creates fee and funding opportunities. A PYMNTS survey found that 79% of middle-market companies and 80% of businesses with less than $250 million in annual revenue plan to upgrade their embedded-finance capabilities within 12 months.
Fifth Third said in second-quarter results released July 17, 2026, that deposits tied to its Newline platform rose by $2.1 billion during the quarter, while Newline fee revenue climbed 35% from a year earlier. The Bancorp reported first-quarter average deposits of $8.32 billion, with FinTech partnerships supplying 93% of total deposits. Pathward, meanwhile, managed $1.07 billion of customer deposits at other banks as of the end of March, generating $7.8 million in fiscal second-quarter servicing fees.
Subscribe to Mark Radar Weekly
Every Friday, the week's strongest signals in your inbox. Unsubscribe anytime.
If you search news on Google, you can set Mark Radar as a preferred source—our coverage will show up more often in your results. Set as preferred source on Google →