May 25, 2022
What is going on in Banking-as-a-Service, also known as BaaS? If you are not familiar with the concept, it is time to educate yourself a little bit. Simply because it is one of the fastest-growing segments of fintech. It does not seem to suffer any of the downturn that we can see recently in other parts of early stage fintechs. What is the future of Banking-as-a-Service? Fintech Review asked a few questions to Trent Sorbe, Founder and President of Central Payments.
Tell us more about Central Payments. What is your elevator pitch? Central Payments is the payments subsidiary of Central Bank of Kansas City and provides payments technology and issuing solutions for fintechs and embedded finance. The company’s Open*CP Fintech API Marketplace is one of the only true banking-as-a-service payments platforms with issuing capability embedded. Open*CP’s vertical integration and i’s native-to-the-cloud technology are the drivers responsible for Central Payments’ rise. It is the fastest growing prepaid card issuer since 2015. The company also operates Falls Fintech, its award-winning startup fintech accelerator. We also produce Fintech Brews & News, a podcast devoted to helping bridge the gap between banking, startups, and the entire fintech industry.
What is your background and what is the story behind the company? My career spans 29 years, all of which has been in banking and payments. I started my career as a bank examiner with the FDIC, focusing on consumer compliance, AML, and community reinvestment. My 9+ years as a regulator was a great foundation for my career and lead me to the private sector. I worked at financial institutions involved in all forms of nationwide lending and prepaid products. Initially, my roles were centered around risk management, compliance, and audit. Until I moved over to run various payments verticals for leading payments banks. In 2014 I founded Central Payments with Central Bank of Kansas City (CBKC). Initially, Central Payments was structured as a digital branch of CBKC. It was focused on generating deposits through relationships with various third party payments companies and vendors. Having grown up alongside fintech, we made a decision in 2019 to expand the breadth of services beyond basic sponsorship and take a technology-first approach. Our Open*CP API Fintech Marketplace went live in April 2020, and to date remains one of the only “real” Banking-as-a-Service platforms.
How is banking-as-a-service evolving The obvious answer is that the breadth of products and payment rails seem to be constantly expanding. That’s a reality shared by all BaaS providers. However, we believe there is an opportunity to expand the risk management capabilities within BaaS platforms. Particularly as the breadth of products expands, regulatory scrutiny increases, and fraud remains a prominent risk.
What problems are you solving with Central Payments? We use the term real BaaS to describe Open*CP because – wait for it – it’s actually from a bank, with issuing capabilities embedded. We characterize this vertical integration as: Technology, Charter, Choice. These characteristics are not available together from our competitors and differentiate us in the marketplace. Our Open*CP Fintech API Marketplace is simplifying the way that established brands and fintechs acquire single-source access to the full payments ecosystem in lieu of expending the resources or acquiring the expertise to piece together all of the individual parts, making it the solution for entrepreneurs who long for a complete integration from a trusted payments bank who leads in innovation. We believe Open*CP’s embedded bank charter will also prove even more advantageous as scrutiny over the lack of transparency and alignment between issuer and platform intensifies. Central Payments also founded Falls Fintech in 2019, an accelerator dedicated to closing the gap between banks and fintech by accelerating their path to market.
Any innovation in fintech more broadly that you are really excited about? While it is difficult to ignore blockchain and crypto, we believe real-time payments embedded inside top-of-mind, valued consumer products (IoT) is both exciting and perfectly suited for BaaS. We are realists when it comes to the value consumers place on their banking products. Especially when it compares to the products and services they are purchasing with their banking products. In other words, financial services are mechanisms to acquire or use the things consumers really value. We’re therefore drawn to anything that makes payments faster and the underlying consumer funds more accessible within someone else product.
Any plans for the future or product roadmap you want people to know about? More rails. More transparency. More capability.