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Synapse Failing Impacts a LOT of FinTechs

FinTech has had a huge surge in popularity the last few years as technology companies layer on top of traditional banking. They offer some great perks, like getting your paycheck two days faster, as well as higher interest rate on your savings.

One risk, and one that never really materialized in the 10+ years I’ve been following and using FinTechs, is with the technology. Many times, the app is just a layer on top of a traditional bank. Sometimes, it’s a layer on a layer.

Last month, one of those layers failed. It wasn’t a sudden and catastrophic failure like when the container ship Dali hit the Francis Scott Key Bridge earlier this year. The failure of Synapse Financial Technologies, which powers a lot of FinTechs like Yotta and Copper, may have occurred in May but the company declared bankruptcy a while back. But when a potential acquirer backed out, everything collapse.

If you’re curious what happened, The College Investor has a quick explainer:

FinTech Crisis Leaves Millions Of Americans Unable To Access Their Money [The College Investor] – “Synapse Financial Technologies was one of the largest providers of these “banking as a service” solutions, and it has found itself in bankruptcy and shutting down. For the banking services and partner banks, this has created a severe disruptions that has left potentially millions of Americans without access to their funds for nearly two weeks.” It’s been way more than two weeks now, sadly.

We Are All Surrounded by Immense Wealth [Raptitude] – “Wild animals all live in abject poverty, because they can’t invent any stuff to make it easier. Humans can improve their condition significantly by acquiring objects and knowledge. Anything useful we gain, on top of our basic no-stuff state, can be broadly called wealth. A bearskin is wealth. A sharp obsidian flake is wealth. A log placed across a stream is wealth. Knowing how to make twine is wealth.”

The Vine of Beauty: the Rothschild Family’s Wine Heritage [The Rake] = “The Rothschild family has achieved exalted status in winemaking over the past couple of centuries. Trying to decide on the No.1 vintage from their magnificent cellars may take a lot longer…” Not a wine guy but it’s fascinating to read about it.