Finding BaaS talent is elusive, expensive and important

Certification programs for banking as a service specialists do not yet exist, and roles in BaaS are still changing. But since standards for this sector are risingIt is important that community banks tap into this elusive expertise.

“It used to be that (BaaS) was something you could figure out as you went along,” said Ryan Hildebrand, the company’s chief innovation officer. Bankwell Bank in New Canaan, Connecticut. “Now it’s almost a matter of having eyes that have seen a lot and laying the foundation from the beginning.”

Financial institutions face a number of obstacles, whether hire externally or cultivate talent from the inside.

Bankers with BaaS experience may demand a bonus for turning down work or need a compelling reason to do the same work at another institution. Local banks that want employees to work locally may have difficulty finding employees from larger companies willing to relocate. When recruiting talent from within, they will likely need to turn to external consultants to help upskill or reskill employees.

Looking for outside talent

The ideal candidate for a BaaS bank “is someone who understands the boundaries of traditional banking thinking, but also knows how to develop relationships with fintech” said Brian Love, head of banking and fintech at executive search firm Travillian.

Hildebrand has experience on both sides of the coin. He served as Vice President of Finance at Simplewidely recognized as the first US neobank to be acquired by BBVA in 2014 and malfunction in 2021. He co-founded Seed, a small business neobank that was sold to Teaneck, New Jersey-based Cross River Bank in 2019. From there, Hildebrand oversaw Cross River’s $8.8 billion-asset payments and BaaS business before taking on the leadership role of president of LSBX, the BaaS division of Lincoln Savings Bank in Rhinebeck, Iowa.

Hildebrand notes that as a startup founder, he can empathize with the mindset of fintech founders, including their need for speed and growth. His experience in fintech also helps him evaluate the suitability of a partnership for the bank, especially from a risk and shared value perspective.

When looking for fintech talent, banks should look for candidates who can work well with teams that don’t have the same innovation culture they are used to.

“The problem is, if you go too far in the same direction with someone who has never worked in a bank, there can be frustration about how quickly things get done,” Love said.

When looking to other banks that may be competitors in the BaaS space, the hiring institution must make a compelling case for itself.

Sunrise Banksin Sioux Falls, South Dakota, specializes in prepaid debit cards, demand deposit accounts and consumer lending. Tyler Seidel, chief financial technology officer at $2.4 billion-asset Sunrise, said the bank is targeting candidates with prepaid experience, ideally people who have worked at other prepaid card banks and established direct connections with fintech companies, not with middleware provider.

“They know what balls are in the air,” he said.

The question still remains as to why such an executive left his current position and moved to another bank.

“The most established BaaS banks may have multiple layers of people under management looking to move up,” Love said.

According to Seidel, Sunrise’s main advantage is its social responsibility. Sunrise is a community development financial institution; a certified B Corporation, which means the nonprofit B Lab Network has determined that it meets social and environmental standards; and a member of the Global Banking Values ​​Alliance, a network of banks that support positive economic, social and environmental change.

“Sunrise is about mission, not profitability,” he said.

The bank is also looking for new BaaS talent from college interns such as the Carlson School of Management at the University of Minnesota in Minneapolis.

“College students bring a lot of ideas to the table, and they will be your future target market or even your current customer,” Seidel said.

Adding talent from within

Sunrise also develops internal talent through employee assessments. transferable skills.

For those in customer service roles, such as universal bankers: “Can they become relationship managers?” Seidel said. “They already understand the basics of finance, money flow and general lingo.”

In some cases, bringing in internal talent may be necessary.

“Smaller community banks like to have people on the ground,” said Brian Mulcahy, managing partner of financial services consulting firm FS Vector. “It will be very difficult to hire an experienced person working in banking who also lives there or is willing to move to a rural area.”

Moreover, existing employees understand the culture and operating system of the bank. Mulcahy recommends bringing the best talent from a bank’s existing compliance program into the BaaS team and filling the positions they vacate.

“Bringing in a completely new team would be a detriment to the bank’s culture,” Hildebrand said.

Sunrise Banks employs a predominantly remote workforce. Seidel believes that forcing employees to work on-site will have a negative impact on recruiting.

BaaS Hiring Situation

In 2021 and 2022, Travillian conducted several back-to-back key executive searches for banks’ BaaS divisions, specifically for the roles of “president of fintech” or “chief financial technology officer” and “chief risk officer.” Since last year, that has given way to seeking mid-level experts in program management, Bank Secrecy Act compliance and risk. Love finds that there is now less emphasis on growth and more emphasis on building infrastructure for future growth.

“The trend I’m hearing is more of a response of, ‘let’s strengthen our risk and compliance function so we can get this initiative right and not be short-staffed,’” Love said.

Mulcahy sees banks hiring for positions such as implementation managers or those who help fintech companies set up and complete due diligence, technical integration and testing with third parties such as card networks; relationship managers are the bank’s main point of contact with its fintech partners on an ongoing basis; and compliance officers who monitor the fintech partner’s policies and procedures, review suspicious activity the fintech company submits to the bank and marketing materials before they are published, and monitor complaint logs.

Community banks must be willing to pay a premium.

“If you’re recruiting from existing issuers because they can quickly fill some of that knowledge gap, you’re going to pay a lot more than you think,” Seidel said. “It’s really started to take off in the last 24 months.”

Konrad Alt, a partner at Klaros Group, suggested in a July interview that local banks are looking to regional banks for talent, which naturally have higher pay scales.

This is all part of the higher costs running a BaaS business, which includes purchasing or creating the necessary technology and preparing for more stringent exam questions.

“New talent is expensive, consultation is expensive,” Hildebrand said, “but in the long run getting buy-in is even more expensive.”