Andreessen-Backed Fintech’s Meltdown Shows Bank Middlemen Risks

Joseph Dominguez and his wife have deposited more than $20,000 with Yotta, a financial technology startup that gamifies savings. Now they can’t touch any of it following the collapse of a separate fintech middleman, Synapse Financial Technologies Inc., in a case that underscores how a popular online banking model can fall through the regulatory cracks.

Synapse, which filed for Chapter 11 bankruptcy protection in April in the US Bankruptcy Court for the Central District of California, operated in a market called “banking as a service.” The company acted as a go-between for banks and their third-party fintech providers, maintaining a ...