Financial Institutions to Exit Banking-as-a-Service Business

Financial Institutions, Inc., a diversified financial services company and parent company of Five Star Bank and Courier Capital, Llc, has announced plans to wind down its Banking-as-a-Service (BaaS) offerings. The decision follows a strategic review by the company's executive management and board of directors, which considered factors such as BaaS contribution to core financial results. The company aims to focus on its core community banking franchise, including retail banking, commercial banking, and wealth management.

Key Takeaways:

• Financial Institutions, Inc. is planning to wind down its Banking-as-a-Service (BaaS) offerings, which represented about 2.0 percent of deposits ($108m) and less than 1.0 percent of loans ($31m) as of June 30, 2024.
• The company will focus on its core community banking franchise, including retail banking, commercial banking, and wealth management.
• All personnel supporting the BaaS line of business will be retained and refocused on core banking operations.
• The wind down process is expected to be completed in 2025.
• Financial Institutions, Inc. has around $6.1 billion in assets and operates through its Five Star Bank subsidiary, which offers consumer and commercial banking and lending services to individuals, municipalities, and businesses.

Statistics:

• BaaS represented about 2.0 percent of deposits ($108m) and less than 1.0 percent of loans ($31m) as of June 30, 2024.
• The company has around $6.1 billion in assets.
• The wind down process is expected to be completed in 2025.

Sources:

• Global Banking News - 17 September 2024
• Financial Institutions, Inc. - Press Release (No specific date mentioned)
• M2 COMMUNICATIONS - News article (No specific date or publication date mentioned)