Thought Leaders in Financial Technology: Sankaet Pathak, CEO of Synapse (Part 2)

Sramana Mitra: You are talking about US accounts for Indian residents?

Sankaet Pathak: Yes. Their thought process stops there. They’re more focused on how much money leaves India versus what other obligations come as a function of it. Primarily, US regulators are still more relevant.

Sramana Mitra: Interesting. At some level, I feel like you might get some traction if you offer your services to Indian banks that want to provide it to their customers.

Sankaet Pathak: We have a pretty large customer in India that is building around our product. Once they go live, we would probably get more customers, which is what happened in Brazil as well. We had one successful customer and the banks started coming. We would be fortunate if we are able to replicate that in India as well.

Sramana Mitra: What other use cases do you see with your product?

Sankaet Pathak: A lot of banks are non-US banks because they provide this capability of a US account. Outside of that, most of our customers are non-banks. They are software companies wanting to embed some financial product into their application.

Sramana Mitra: The use case that you sell to banks is this Global Cash product.

Sankaet Pathak: That is the use case banks have most latched on to.

Sramana Mitra: It makes sense. Currency fluctuation is tremendous right now. The euro is getting destroyed. The pound is getting destroyed. Tell me about the other use cases. Give me an example of a software company that is building FinTech functionality.

Sankaet Pathak: One that’s near and dear to me is credit building. We’re a regulated broker/dealer in the US for the cash management product, but we also have our own lending licenses in the US. We’ve gone state by state and got our own lending licenses. Through that, we provide an API for credit building if you’re an individual who just immigrated to the US or you are someone who didn’t have access to credit-building capabilities.

A really good example of this is Yotta and Grid which are dealing with a lot of folks in the Uber and Lyft type of spaces. The gig economy usually doesn’t have adequate credit build. Through them, the products they provide are either a charge card that helps you build credit or just do a credit builder loan. They can be secured or unsecured. It helps people build credit.

We issue the card that you use. We issue the loan account. We also report the credit back to the credit bureaus to help you build your credit. In the case of Yotta, this manifests itself in a card. It’s a simple card that you can use.

Sankaet Pathak: Finch is another example. It’s a card. For customers, there is no additional obligations around deposits. Whatever money you have in your checking account can be attributed to his loan. There is no capital risk for Yotta, the end user, or Synapse. Then another fun use case is Juno. Juno provides a checking account to people who are really enthusiastic about crypto – folks who want to receive a portion of their payroll in crypto and spend through the checking account as well.

This is more the affluent crowd. They want to use some of that to invest in various crypto projects. We open up a checking account for their user and we open up a crypto account for their user. We issue a debit card on top of the checking account. People can instantly trade between their crypto and checking accounts. Those are a couple of different use cases.

Sramana Mitra: Are you doing anything with US banks?

Sankaet Pathak: US banks are partners. They help us with the ACH processing. They’re not customers.

Sramana Mitra: None of your products are resonating with US banks yet.

Sankaet Pathak: A lot of our time is spent competing with US banks to our fintech customers. The modern revolution has been giving more digitally-native products to people through non-banks. That’s the market we found ourselves in. I do think, over time, most banks would have a different IT strategy. Today most of banks outsource all of their work around IT and technology. They’re not constantly building new things.

Over time for banks to compete with fintech, they’re going to have to up their game on technology. That would be the right time for us. We’re already seeing that with non-US banks. Non-US banks are far more progressive and innovative on the technology side.

Sramana Mitra: The traction you’re seeing with non-US banks is because you have a really compelling use case. It’s all about having a compelling use case.

Sankaet Pathak: Right. Our first product is a checking account which they already provide. Second, we have a crypto account but most banks don’t want to provide crypto. The third one is a credit issuance product. Most small banks in America outsource credit issuance. Today Synapse doesn’t do credit decisions. When we get there, I think that would be a very compelling product.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Sankaet Pathak, CEO of Synapse
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