The Partner Bank Boom

Partner banks, chartered institutions that provide fintech companies access to banking products, have exploded in recent years—by our count, their ranks have grown more than five times over the past decade. Today, there are more than 30 partner banks representing hundreds of fintech relationships and financial services. These partnerships come in all shapes in sizes, from mega-banks like Goldman Sachs, which powers the Apple credit card, to Hatch Bank, which has $68 million in assets and started with a single fintech partner, HM Bradley. 

The rapid rise of this trend begs the question: Why has the number of partner banks increased so suddenly over the past decade? For one, the relationship is mutually beneficial. Fintech companies are able to offer banking products without the regulatory overhead of becoming a bank, while banks harness these partnerships to improve their returns by gathering low-cost deposits or growing asset-light fee streams. In addition, it has become increasingly easier to form these partnerships. Eliciting a partner bank used to require a herculean effort, due to both compliance concerns and technical hurdles. Now, thanks to the rise of companies that provide banking infrastructure as a service, fintech companies can launch products in a matter of months, not years.

As the partner bank network has grown and fintech time-to-market has decreased, entrepreneurs are better equipped than ever to continue innovating in financial services. Still, it’s a complicated many-layered space. In the graphics below, we aim to provide greater visibility into this interconnected and expanding ecosystem: the banks, the fintech companies, and the many services these partnerships afford. We’ve mapped out how partner banks and fintech companies collaborate to provide greater value and additional services for consumers. To view and download the extended list of more than 30 partner banks and fintech partners, including the products they offer, subscribe to our fintech newsletter.

This recent swell in partner banks benefits both the banks and the fintech companies—that marriage of necessity can work well for both parties. A survey of partner banks’ returns shows that many operate at profitability levels two to three times above average.  

Charts provided herein are for informational purposes only and should not be relied upon when making any investment decision.

Many of these banks specialize in different forms of partnerships: Bancorp and Green Dot focus on powering consumer banking experiences, for example, while Celtic Bank, Cross River Bank, and WebBank mainly pursue partnerships with lenders. 

Select Categories and Prominent Partner Banks

Consumer Banking (Debit Card and Deposits)

Bancorp, Green Dot, and NBKC have partnered with a number of consumer fintech companies that aim to offer full-stack consumer banking services. These banks have relationships with some of the largest neobanks, as well as corporates like Uber and Walmart. Green Dot has had a partnership with Walmart since 2006.  

Consumer Lending 

Cross River and WebBank and have the largest rosters of lenders as partners.

Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available here: https://a16z.com/investments

SMB Lending

Celtic Bank is a leading provider of SMB loans and has been an early partner to SMB-lending fintechs. Celtic has been engaged with Kabbage, for example, since 2008.

Card Issuance

Sutton Bank provides consumer and business card issuance across debit and credit for large players. Notably, Sutton Bank and Marqeta initially partnered in November 2011; they launched an enterprise B2B solution in 2013. 

To view the expanded list more than 30 partner banks and fintech partners, including their assets and the services they offer, subscribe to our fintech newsletter.

***

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. 

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

Stay on top of fintech

Sign up for our fintech newsletter to get the a16z take on the future of fintech.