Upstart and the limits of the partner-bank model

Welcome back to Fintech Recap. I'm Alex Johnson, joined as always by my partner in recapping, Jason Mikula.

We kick things off with Bilt 2.0. After Wells Fargo pulled the plug on a partnership costing the bank reportedly $10M a month, Bilt rebuilt its stack with Column as the bank partner, Cardless as issuer processor, and Fidem Financial as the capital provider. The transition was not smooth. Picture a free-for-all of declined applications; lower credit limits; missed, failed, or duplicated rent payments; fraud; and an AI customer support bot looping without resolution. My read: Bilt 1.0 worked because Wells Fargo absorbed everything. Bilt 2.0 jerry-rigged a multi-vendor solution and asked customers not to notice.

From there, we get into what I'm calling the “graduation problem” in BaaS. As fintech companies like Mercury pursue charters (and deals like Capital One acquiring Brex reshape the landscape), the same partners that fueled growth for sponsor banks are now leaving or vertically integrating. We debate whether BaaS was ever an enduring model or a toll on regulatory scarcity. What happens when that scarcity disappears?

From there, we turn to New York’s proposed financial data rights law, which mirrors and extends the CFPB’s 1033 rule. It’s the most ambitious open banking legislation ever introduced in the U.S. It covers consumers and small businesses, applies to every bank serving New Yorkers regardless of charter type, and explicitly bans fees for data access. 

We close with two Can't Let It Gos: Elizabeth Warren's letter to MrBeast, which resurfaced deleted Step videos coaching teenagers on how to convince their parents to let them invest in crypto, and the prediction market industry's very aggressive March Madness push from Coinbase and Kalshi.

This episode is brought to you by Persona. 

Persona is the identity verification platform trusted by fintech's fastest-growing teams, from YC-backed startups to publicly traded companies. Build your identity program with enterprise-grade tools, starting at $0 with Persona's Startup Program.

Fintech Takes listeners can get a full free year through Persona’s Startup Program at withpersona.com/ftt

Sign up for Alex’s Fintech Takes newsletter for the latest insightful analysis on fintech trends, along with a heaping pile of pop culture references and copious footnotes. Every Monday and Thursday: https://workweek.com/brand/fintech-takes/ 

And for more exclusive insider content, don’t forget to check out my YouTube page.

Follow Jason:

Newsletter: https://fintechbusinessweekly.substack.com/

LinkedIn: https://www.linkedin.com/in/jasonmikula/

Follow Alex: 

YouTube: https://www.youtube.com/channel/UCJgfH47QEwbQmkQlz1V9rQA/videos

LinkedIn: https://www.linkedin.com/in/alexhjohnson
Twitter: https://www.twitter.com/AlexH_Johnson