The US BaaS market is incredible crowded, with easily 20 players. This includes 1st generation companies like Synapse which was founded in 2014, and newer generation companies like Unit, which was founded in 2019. Clearly, the US is the biggest market for BaaS and Embedded Finance, so it’s understandable that many players took their shot. But it’s also fair to say that many of them are dependent on continuous venture funding, which obviously came to a halt in the past twelve months. Thus, a consolidation in the US BaaS market is overdue.
This week, the US bank Fifth Third announced that it had acquired US BaaS provider Rize Money. Personally, I believe this is the first of many mergers or acquisitions in the space. This acquisition of Rize Money is a bit more interesting since a bank has taken them over. Obviously, banks should be getting stronger in the Embedded Finance space, and if providers are now struggling to receive additional funding, then the timing might be perfect. Additionally, it’s not a surprise that Fifth Third is the first bank in the US to capitalize on this situation. Fifth Third has been positioning itself nicely with an Embedded Payments offering and partnerships.
