Each week, Steve is breaking down what’s happening in fintech banking with the kind of clarity you get from someone who’s lived through board debates, pricing standoffs, and product launches that either scaled or crashed. This isn’t surface-level commentary. It’s the real story behind sponsor bank partnerships, embedded finance moves, and BaaS programs that most people only hear about after they’ve already succeeded or failed.
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The Embedded Divide
This week showed two contrasting sides of embedded: big players buying deeper into platforms and rails, and others quietly backing out of “digital” bets that aren’t earning their keep. Programs now fall into two camps: the ones with strong economics and controls, and the ones that keep landing in the news for all the wrong reasons. Sponsor banks sit square in the middle of that divide. The ones that come out okay treat every program like it has to pass a hard board review and a harder exam, not just look good on paper.
Consolidation, Casualties, and Charter Independence
Capital One’s $5.15 billion acquisition of Brex brings corporate cards, expense management software, bill pay, business accounts, and roughly $13 billion in deposits under one roof. After years of battling Ramp for market share while managing mounting compliance costs, Brex accepted what many view as a discounted exit.
The real question is does this acquisition marks a tipping point toward single-vendor dependency in corporate fintech and intensified regulatory scrutiny across the sector.
Brex peaked at $12.3B in 2021, Fire Sale in 2026 at $5.15B
Big Bank economics leaving smaller sponsors exposed
This vertical integration raises the bar on BaaS sponsors
Fragmented vendor setups will now look riskier
Sumitomo Mitsui Banking Corporation (SMBC) a $1.6 Trillion dollar bank from Japan is shutting down Jenius Bank in the US. Launched in 2023 and last reported in 2025 to have deposits in excess of $1B and loans equalling $900M+.
Jenius Bank’s 24‑month run shows that traditional banking metrics still rule; net interest margin, efficiency ratio, and return on assets tell the real story. It is another reminder (and another failed neo bank) that couldn’t convert strong funding and brand support into long‑term profitability.
SMBC will be eliminating a $38+ million annual loss
FDIC insurance keeps depositors protected during the wind-down process
Strong asset growth didn’t translate to sustainable profitability.
Hatch Bank appointed former Unit CCO Amanda Swoverland as President and added Francis Mitchell as CFO, signaling a clear bet on sponsor banking as a core growth business, not a side project. The bank reported doubled lending partnerships and nearly tripled earnings from 2024 to 2025, off a roughly $150 million asset base, as it deepened its role in embedded lending across verticals like home improvement and solar.
Hatch is hiring operators who’ve lived inside fintech programs, then giving them the keys to the bank side of the house. That’s a clear signal to partners and regulators that governance, risk, and program design sit in the core business, not in a side committee.
Leadership upgrades are now table stakes for serious sponsor banks.
Earnings leverage comes from focused niche verticals like point-of-sale and home improvement lending.
Talent moving from fintechs into banks is a signal that the sponsor seat now carries real strategic weight in banking.
The OCC took in as many charter applications in 2025 as in the prior four years combined, and there has been no slow down in 2026. Checkout.com secured approval for a Georgia Merchant Acquirer Limited Purpose Bank charter on January 11, 2026. Nissan and PayPal are pursuing Utah industrial loan company charters.
There is an apparent shift where strong partners aren’t content to just rent a charter anymore; they want to own one. The banks that win here will lean into deeper, higher-value relationships and be very clear about what they offer beyond basic charter access.
Charter demand from Checkout.com, Nissan, and PayPal shows embedded finance is maturing into full-stack banking plays.
Some of today’s best sponsor-bank clients are quietly designing a future where they operate as peers, not dependents.
Sponsors that only “rent the charter” will look interchangeable once clients secure their own licenses.
Banks that package governance, risk, liquidity access, and regulatory credibility as core products will stay relevant even as partners move up the licensing curve.
Zepz, the parent of WorldRemit and Sendwave, agreed to acquire Pomelo International to move beyond straight remittances into cards, lending, and credit-building tools for cross-border communities.
Cross-border (what most sponsor banks run from) is turning into a full account relationship. While that is a good business model, it also means multi-party, cross-border KYC and AML, not only money movement.
Migrant-focused products are moving beyond send-and-receive to full financial relationships.
Remittance flow provides access to transaction data needed to underwrite cross-border households.
KYC, AML, and fraud controls need to be tailored to multi-user, multi-country family accounts.
Sponsors that can design specific playbooks for migrant-use cases will be better positioned than generic card issuers.
Some weeks it’s easy to see the pattern. Full-stack platforms are becoming the norm, and weaker, non-niche plays are exiting. The question everyone keeps asking still applies: will fintechs take over banking, or will banks take over fintechs. The line is as blurred as ever, but the winners are already acting like both.
Takeaway:
The need for a niche play is becoming more evident. As the big banks buy platforms, smaller banks must pick lanes where they own the risk and stand behind programs without flinching. The win for sponsors isn't chasing every logo. It's being the one partner nobody wants to lose when the noise dies down.
From The Source
For those of you wanting a more in-depth look at the articles (and the links to them…)
Capital One announced a definitive agreement to acquire Brex in a stock and cash transaction valued at $5.15 billion, marking one of the largest fintech acquisitions in recent history. The deal combines Capital One’s $669 billion in total assets and underwriting capabilities with Brex’s AI-native platform that unifies corporate cards, expense management software, and banking.
Brex serves over 25,000 companies globally including DoorDash, TikTok, Anthropic, Robinhood, and Intel across 50+ countries. The platform uses AI agents to automate financial workflows, reduce manual processes, and provide real-time spend control.
Sumitomo Mitsui Banking Corporation (SMBC) confirmed it is shutting down Jenius Bank, its US-based digital banking unit launched in 2023, suspending all new account openings and loan originations. The closure affects more than 160 employees who will be laid off by March 2026 according to WARN notice filings.
Hatch Bank appointed former Unit Finance chief compliance officer Amanda Swoverland as President and Francis Mitchell as Chief Financial Officer to strengthen its sponsor banking and embedded fintech operations. The hires come as Hatch Bank doubled lending partnerships and nearly tripled earnings from 2024 to 2025.
The Office of the Comptroller of the Currency (OCC) processed 18 banking charter applications in 2025, matching the previous four years combined, ollowing a regulatory shift under Comptroller Jonathan Gould and FDIC Chair Travis Hill who encouraged fintech charter applications. Most submissions were for national trust charters (asset custody without deposits/lending) and industrial loan company (ILC) charters from firms including PayPal, Nissan, and Checkout.com, with six conditional de novo charters approved in 2025
Zepz, the global payments group behind WorldRemit and Sendwave, acquired San Francisco-based fintech Pomelo International to expand beyond remittances into cards, lending, and credit services for cross-border communities. Pomelo offers the first credit card built for money transfer, eliminating cash advance fees while allowing customers to build credit through remittance obligations and earn points on purchases with their Pomelo Mastercard.
If you care about modern banking, detailed breakdowns of how financial institutions work with fintechs, and partnerships that actually perform, and you want access to candid conversations that usually stay inside the vault, this series is built for you.
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