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The Synapse
Bankruptcy Crisis

June 6, 2024

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Supervest Avoids Similar Risks by Eliminating the Middleman

The recent bankruptcy of Synapse Financial Technologies has sent shockwaves through the fintech industry, leaving millions of Americans without access to their funds and causing significant disruptions for neobanks and fintech firms relying on Synapse’s banking-as-a-service (BaaS) platform. As companies like Yieldstreet, Yotta, Juno, and Copper struggle with the fallout, our firm stands apart by avoiding the pitfalls associated with using intermediaries like Synapse. This note delves into the Synapse crisis and explains how our direct approach to financial services ensures greater security and reliability for our customers.

The Synapse Financial Collapse: A Wake-Up Call

Synapse Financial Technologies, a leading BaaS provider, recently declared bankruptcy, causing a cascade of issues for its partner firms and their customers. Popular banking apps and Alternative Platforms like Yieldstreet, Mainvest, Yotta, Juno, and Copper, which leveraged Synapse’s technology to connect with traditional bank accounts, found themselves unable to access customer funds. This disruption has affected over one million Americans, many of whom are now facing severe financial distress.

Disruption and Distress for Consumers

The impact on consumers has been profound. Reddit threads and court documents reveal harrowing stories of individuals unable to access their money, pay bills, or cover rent. Direct deposits from payroll providers are landing in inaccessible accounts, exacerbating the financial strain on affected customers. Evolve Bank and Trust, one of the largest banking partners, has stated that it needs ledgers from Synapse to reconcile customer accounts, raising concerns about the accuracy of balances once the dust settles.

Despite the scale of the crisis, regulatory bodies like the FDIC and the Federal Reserve have remained silent, leaving consumers in limbo.

 

The Broader Implications

Synapse’s collapse highlights the vulnerabilities inherent in the BaaS model. With contracts spanning 20 banks and 100 fintech firms, Synapse served approximately 10 million end users. These partnerships allowed fintech companies to offer FDIC-insured banking services, providing a false sense of security. Unlike traditional bank failures, where customer access is typically restored within days, this situation has locked customers out of their accounts for weeks, potentially triggering a bank run when access is finally restored.

Several affected companies, including  Copper and MainVest, have already announced they are ceasing operations due to the ongoing crisis. This highlights the precarious nature of relying on third-party service providers for critical banking functions.

How Supervest Avoids Similar Risks

In stark contrast to the turmoil faced by Synapse’s clients, Supervest’s direct approach to financial services ensures that we are not exposed to the same type of risks. Here’s how we maintain stability and security for our customers:

No Middleman

By directly partnering with FDIC-insured banks and managing our own technology infrastructure, we eliminate the middleman. This approach not only reduces potential points of failure but also ensures that we have complete control over our operations and customer funds.

Lock-Sure, Multi-Layered Security

Supervest provides a comprehensive security framework known as Lock-Sure, which incorporates multi-layered security measures to protect our valued customers. Our commitment to security is ongoing and encompasses the following:

Physical Security: Our data centers are fortified with physical barriers, surveillance, and strict access controls to prevent unauthorized entry.

Hardware Security: We utilize advanced hardware security modules (HSMs) to safeguard sensitive data and ensure the integrity of our systems.

Software Security: Our software is built with robust security features, including end-to-end encryption, secure coding practices, and regular vulnerability assessments.

Logical Security: Logical access controls are implemented to restrict system access to authorized personnel only, with multi-factor authentication and role-based access controls enhancing security.

Redundancy and Continuity: We have established redundancy at every level of our infrastructure to ensure continuity of service. In the event of a failure, backup systems immediately take over, minimizing any disruption to our services.

Peace of Mind with Supervest

Supervest’s dedication to security and our direct operational model provide our customers with the peace of mind needed to focus on their investments, not on issues that  could compromise their ability to access their investment funds. By eliminating intermediaries and investing in state-of-the-art security measures, we ensure that our platform remains reliable, secure, and resilient against potential threats.

 

 

 

Conclusion

The Synapse bankruptcy serves as a stark reminder of the risks associated with relying on intermediary service providers in the financial industry. By contrast, Supervest’s direct approach to managing financial services ensures greater security, reliability, and trust for our customers. As the fintech landscape continues to evolve, our commitment to eliminating the middleman and maintaining robust security measures positions us as a stable and trustworthy partner in an uncertain world.

For those affected by the Synapse crisis, our message is clear: Choose a financial partner that prioritizes direct management and security to safeguard your financial future. Trust Supervest for a secure and seamless financial experience.

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