Finding BaaS talent is elusive, expensive — and essential

Certification programs for banking-as-a-service specialists do not yet exist, and the roles in BaaS are still evolving. But as the standards for this sector ramp up, it is important that community banks bulk up on this elusive expertise.

"In the past [BaaS] was something that you could figure out as you go," said Ryan Hildebrand, chief innovation officer at Bankwell Bank in New Canaan, Connecticut. "Now it's almost imperative to have a set of eyes that has seen a lot and build the foundation right from the get-go."

Financial institutions face a few obstacles, whether they recruit externally or nurture talent from within.

Bankers with experience in BaaS can demand a premium to jump ship, or need a compelling reason to do the same job in a different institution. Community banks who want employees to work onsite may have difficulty finding employees from larger companies who are willing to move. When furnishing talent from within, they will still likely have to turn to outside consultants to assist with upskilling or re-skilling employees. 

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Seeking talent from the outside

The ideal recruit for a BaaS bank "is someone who understands the confines of legacy bank thinking, but also knows how to cultivate relationships with fintechs," said Brian Love, head of banking and fintech at executive search firm Travillian.

Hildebrand has experience on both sides of the coin. He served as vice president of finance at Simple, widely recognized as the first U.S. neobank, which was acquired by BBVA in 2014 and shut down in 2021. He co-founded Seed, a small business neobank that sold to Cross River Bank in Teaneck, New Jersey, in 2019. From there, Hildebrand oversaw the payments and BaaS business at the $8.8 billion-asset Cross River before taking on the role of president of LSBX, the BaaS division of Lincoln Savings Bank in Reinbeck, Iowa.

Hildebrand points out that as the founder of a startup, he can empathize with the mindset of fintech founders, including their need for speed and growth. His fintech experience also helps him assess partnership suitability for a bank, especially in terms of risk and shared values.

When sourcing talent from fintechs, banks should look for candidates that can communicate well among teams that do not have the same innovation culture they are used to.

"The problem is if you go too far one way, with someone who never worked in a bank, there could be frustrations as to how quickly things get done," said Love.

When sourcing from other banks, which could be competitors in the BaaS space, the hiring institution needs to make a persuasive case for itself.

Sunrise Banks, in Sioux Falls, South Dakota, specializes in prepaid debit cards, demand deposit accounts and consumer lending. Tyler Seydel, chief fintech officer at the $2.4 billion-asset Sunrise, said the bank targets candidates with experience in the prepaid space, ideally people who worked at other banks that issue prepaid cards and formed direct connections with fintechs rather than with a middleware provider.

"They know what balls are in the air," he said.

There is still the question of why such an executive would leave their current role and move to another bank.

"The most prominent BaaS banks may have a few layers of people under the lieutenants aspiring to move up," said Love.

For Seydel, a major draw of Sunrise is its social responsibility. Sunrise is a community development financial institution; a certified B Corporation, which means nonprofit network B Lab determined it met social and environmental standards; and a member of the Global Alliance for Banking on Values, a network of banks that support positive economic, social and environmental change. 

"Sunrise has a mission over margin component," he said.

The bank also seeks fresh BaaS talent from college interns, such as from the Carlson School of Management at the University of Minnesota in Minneapolis.

"College students bring in tons of ideas and they are your future target market or even present-day customer," said Seydel.

Supplementing with talent from within

Sunrise also cultivates internal talent by assessing employees' transferable skills.

For those in customer service, such as universal bankers, "Could they flex into being a client relations manager?" said Seydel. "They already understand the basics of finance, money movement, by and large the jargon."

In some cases, furnishing internal talent may be a necessity.

"The smaller community banks like to have people on-site," said Bryan Mulcahey, a managing partner at financial services consultancy FS Vector. "It'll be very hard to recruit an experienced banking-as-a-service employee that also happens to live there or is willing to move to a rural area."

Moreover, existing employees understand the bank's culture and operating systems. Mulcahey recommends turning top performers from the existing bank compliance program into the BaaS team and backfilling the roles they vacated.

"Bringing in a complete new team would be a disadvantage to a bank's culture," said Hildebrand.

Sunrise Banks has a largely remote workforce. Seydel feels that forcing employees to work onsite would adversely affect recruiting.

The BaaS hiring landscape

In 2021 and 2022, Travillian conducted several consecutive searches for lynchpin leaders for banks' BaaS divisions, namely "fintech president" or "chief fintech officer" and "chief risk officer" roles. Since last year, that has given way to mid-tier searches for experts in program management, Bank Secrecy Act compliance and risk. Love finds there is less emphasis on growth and more focus on building infrastructure for the sake of future growth.

"The trend I am hearing is more of that reactive 'let's beef up our risk and compliance division so we can do this initiative correctly and we're not short-staffed,'" said Love.

Mulcahey sees banks hiring for roles such as implementation managers, or those who help a fintech get set up and complete due diligence, technical integration, and testing with third parties such as card networks; relationship managers, the main point of contact between the bank and its fintech partners on an ongoing basis; and compliance officers, who oversee a fintech partner's policies and procedures, review suspicious activity the fintech escalates to the bank and marketing materials before they are posted, and monitor complaint logs.  

Community banks must be prepared to pay a premium.

"If you are picking up folks from existing issuers, because they can close some of that knowledge gap quickly, you'll be paying far more than you think you would," said Seydel. "That has really started to take flight over the last 24 months."

Konrad Alt, a partner at Klaros Group, suggested in a July interview that community banks seek talent from regional banks, which naturally come with a higher pay scale.

This is all part of the higher costs of doing business in BaaS, which includes buying or building the necessary technology and preparing for more rigorous examination questions.

"New talent is expensive, consulting is expensive," said Hildebrand, "but it's more expensive to get a consent order in the long run."