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Financial Institutions (NASDAQ:FISI) intends to start an orderly wind down of its Banking-as-a-Service (BaaS) offerings, as the lender prioritizes its core banking operations, it said on Monday.
The bank is initially targeting completion of the wind down sometime in 2025. It expects to retain all personnel positions supporting the BaaS business, both through the wind down period and beyond.
The financial impact of the move is expected to be immaterial, the company said, given the modest size of the BaaS business. Additional details are expected to be provided during its Q3 earnings call in October.
Of the bank’s 12 current BaaS partnerships, four are live, two are in onboarding, four have not yet begun testing, and two have already been in the process of offboarding.
The move followed an internal review “that considered many factors, including the contribution of BaaS to our core financial results, evolving regulatory expectations and a proposed rule regarding the re-classification of BaaS deposits as brokered, in addition to the future investments in talent and technology necessary to achieve scale,” said Financial Institutions President and CEO Martin K. Birmingham.
The company sees “significant opportunity and growth potential for our retail banking, commercial banking and wealth management business lines within our existing geographic markets,” he added.
