Thinking about switching banking partners? What fintechs need to know

Switching or adding a banking partner is a strategic move involving complex risks, legal obligations, and operational requirements. For fintechs, where banking-as-a-service (BaaS) relationships are central to delivering products and maintaining compliance, getting this transition right is critical. A poorly managed change can disrupt your business and damage the trust you’ve worked hard to build with your customers and with your partners.

Here’s what to consider before you make the move.

Why Fintechs Change Banking Relationships

There are plenty of valid reasons to consider a new or additional banking relationship. Maybe you’re preparing to launch a new product, expand into a new market, or reduce concentration risk by diversifying your partner base. In some cases, a fintech may simply outgrow its current relationship or find that the institution’s risk appetite no longer aligns with the business model.

Whatever the reason, the decision should begin with a clear-eyed understanding of the full picture—starting with your contracts.

Start with Your Agreements

Before initiating any conversations with prospective partners, examine your existing agreements. Many BaaS contracts include exclusivity clauses or restrictions on establishing relationships with other institutions. These provisions can be buried in legal language and easy to miss but overlooking them could create unnecessary friction, or worse, legal disputes, with your current partner.

Work with your legal and compliance teams to review these agreements thoroughly. If you’re unsure how to interpret exclusivity or non-compete terms, that’s where experienced advisors who understand BaaS partnership dynamics can be helpful. Addressing these terms early allows you to pursue new relationships with transparency and integrity, avoiding surprises later in the process.

Understand What a New Partner Really Means

Once you’ve cleared the path internally, the next step is due diligence on your prospective banking partner. It’s tempting to assume that all banks or credit unions that support fintechs operate similarly—but that’s rarely the case. Each partner has a different compliance culture, operational approach, and risk framework.

Before committing, ask:

• How long have they been working with fintechs?
• Do they specialize in certain types of programs or customer segments?
• What does their supervisory history indicate about how they manage risk and oversight?

A key step is talking to fintechs that already work with the institution. While your prospective partner won’t share proprietary details, they should be able to provide references or introductions. These conversations offer insights into how responsive, collaborative, and transparent the partner is in practice, not just on paper.

Know What You’ll Be Responsible For

No matter how exciting a new partnership may seem, it’s important to understand what you’ll be expected to implement and manage on the ground. Every institution will apply its own interpretation of regulatory guidance, and those interpretations will affect how you run your day-to-day operations. Failing to anticipate these changes can lead to missed deliverables or delays in your go-live timeline.

To prepare, ask prospective partners detailed questions like:

• What level of BSA/AML oversight will you require from us?
• What is your typical onboarding timeline?
• Who is responsible for transaction monitoring?
• What are our reporting obligations, and how frequently must we submit them?
• What kind of ongoing audits or reviews will we be subject to?

These conversations can reveal whether the relationship will be scalable—or simply transactional. If you’re juggling multiple partnerships, see our guidance on coordinating multi-bank audits.

Prepare Internally Before You Transition

Changing or adding a banking partner is disruptive, even when it’s a positive change. It takes significant time, coordination, and resources to get it right. From migrating customer accounts and updating contracts to revising compliance policies and realigning technical integrations, your team will need an internal roadmap that covers:

• Customer and vendor communication (if required)
• API reconfiguration and system integration
• Updated training materials and documentation
• Parallel compliance testing
• Revised risk assessments

Depending on your product and customer base, the switchover may involve regulatory notifications or increased scrutiny from existing oversight bodies. Build in sufficient time to meet these obligations while maintaining business continuity.

Choose a Partner, Not Just a Provider

In the fintech space, the strength of your program depends heavily on the strength of your partnerships. A banking partner doesn’t just provide access to financial services—they are also extending their charter and their reputation to your business. That level of trust means their compliance and risk functions will be deeply connected to yours.

That’s why it’s important to look beyond pricing or go-to-market synergies. Ask yourself:

• Is this institution aligned with our long-term vision?
• Do they have a proven ability to adapt under regulatory pressure?
• Will they work with us as true collaborators or as gatekeepers?

Making the right decision here lays the groundwork for smoother audits, faster product rollouts, and greater stability as your company grows.

We Can Help

At Elliott Davis, we help fintechs evaluate their readiness, conduct program assessments, and navigate complex transitions. Our team understands the regulatory, contractual, and operational realities that come with BaaS relationships.

If you’re considering a new banking partner, contact us today to discuss how we can support your strategy and help you move forward with clarity and confidence.

The information provided in this communication is of a general nature and should not be considered professional advice.  You should not act upon the information provided without obtaining specific professional advice.  The information above is subject to change.