How Banks Can Build Compliant Fintech Ecosystems Without the BaaS Burden

By Andrew Jolley, CAMS – Fraud & AML Solution Strategist, FiVerity 

The Bank–fintech partnerships are evolving in a big way. What started as a race to launch new products through Banking-as-a-Service (BaaS) has now entered a period of regulatory recalibration, and as compliance professionals know, the time it takes for uncertainty to be addressed by regulators could be lengthy. As oversight expectations rise, many banks are realizing they don’t need to operate full-scale BaaS infrastructure to grow through fintech partnerships. 

 Instead, banks need compliance-first ecosystems that unite innovation and governance where oversight, not infrastructure, forms the foundation for scalable collaboration. 

The Changing Reality of BaaS 

BaaS platforms once promised to help banks reach new customers by embedding financial products directly into fintech apps. But the model has revealed serious weaknesses from a compliance standpoint. 

Fragmented oversight, unclear data ownership, and mounting compliance costs have left many institutions reassessing their approach. In 2024, the FDIC and OCC issued multiple enforcement actions tied to sponsor-bank programs where operational control and data access had been delegated to third parties. The most notable action was against Blue Ridge Bank, which after the Cease-and-Desist order triggered herculean efforts to reform. According to Corporate Compliance Insights, over 25% of FDIC enforcement actions that year involved sponsor banks supporting fintech programs. 

The bottom line is that banks own the risk. Limited visibility into partner activity means limited compliance no matter how unclear the rules may seem. 

The BaaS Burden 

Running a BaaS program can stretch a bank’s resources and risk frameworks to their limits. Common challenges include: 

• Complex vendor chains that make it difficult to track transaction data or confirm record ownership. 
• Duplicated compliance processes for each fintech program, leading to audit fatigue. 
• Inconsistent reporting that limits visibility between reviews. 
• Costly integrations that require new API layers and technical oversight. 

For many institutions, the return no longer justifies the risk. Banks want to participate in fintech-driven growth without carrying out the operational and regulatory burden that BaaS entails. 

Building Compliance-First Fintech Ecosystems 

A compliance-first ecosystem allows banks and fintech's to collaborate within defined boundaries that protect both innovation and regulatory accountability. 

In this model: 

• The bank maintains oversight of compliance frameworks and direct visibility into risk. 
• The fintech retains control of customer experience and operational systems. 
• The shared environment facilitates transparency, continuous monitoring, and audit readiness. 

A compliance-first ecosystem is what oversight infrastructure enables an environment where innovation happens under continuous supervision rather than periodic review. 

From Infrastructure to Oversight 

The infrastructure-heavy approach of BaaS is giving way to a lighter, more agile model built on oversight infrastructure: technology designed to make collaboration transparent, not transactional. 

This approach centers on five key capabilities: 

Together, these capabilities move banks from static oversight to continuous governance — a model that satisfies regulators’ expectations and scales more efficiently than BaaS ever could. 

Putting Compliance-First Ecosystems into Practice with FiVerity 

FiVerity’s Partner Hubs were designed to make this model practical. They give banks and fintechs a secure, permissioned environment to monitor risk, share intelligence, and demonstrate compliance together. 

Here’s how it works: 

1. Integration: Banks connect existing AML, fraud, and onboarding systems — no new core or payments infrastructure required. 
2. Visibility: Fintech partners share approved risk data or alert summaries through permissioned access. 
3. Monitoring: FiVerity aggregates these inputs into dashboards that surface emerging risks and shared fraud patterns. 
4. Collaboration: Both parties can open shared cases, escalate issues, and document actions in real time.
5. Reporting: All activity is recorded in an immutable audit trail that supports examiner expectations. 

This structure reduces technical complexity and compliance risk while keeping data ownership and operational responsibility exactly where regulators expect it to stay. 

Why Oversight Infrastructure Matters Now 

Regulators are making their expectations clear. Sponsor banks must: 

• Maintain continuous oversight, not after-the-fact reviews. 
• Ensure real-time access to transaction and risk data. 
• Establish clear accountability for AML, KYC, and sanctions controls. 
• Provide evidence of governance that auditors and examiners can verify. 

FiVerity’s Partner Hubs give banks the ability to meet these expectations and scale confidently. The platform turns oversight from a compliance obligation into a strategic advantage — one that improves collaboration, reduces risk, and builds trust with both fintech's and regulators. 

A Smarter Path Forward 

Banks don’t need to become technology providers to drive fintech innovation. They need visibility, accountability, and a framework for continuous collaboration. 

By focusing on oversight rather than infrastructure, institutions can: 

• Reduce vendor complexity and audit volume. 
• Strengthen fraud and AML detection. 
• Build stronger, more transparent partnerships. 
• Scale safely under regulatory scrutiny. 

The future of fintech collaboration will be built on compliance-first ecosystems and environments where data is permissioned, responsibilities are clear, and oversight is continuous. Thus, creating a safe and compliant ecosystem within the Baas sphere 

That future is already here. The question for banks isn’t whether to embrace oversight, but how quickly they can make it their competitive advantage. 

Key Takeaway 

Full-scale BaaS promised speed but delivered complexity. Oversight infrastructure offers a better path forward: one where banks maintain control, fintech's can innovate safely, and where collaboration thrives under shared transparency.