The news: NY-based neobank Stash this week introduced Stash Core, its proprietary core banking platform, per a press release.
How does it work? Stash, with $3 billion in assets under management and 2 million customers, now has full control over its core banking operations.
Stash also has updated its stock-back debit Mastercard, which allows customers to earn shares in companies they’re buying from, and it has entered into new partnerships with Mastercard as well as with Stride Bank, which provides banking services; Marqeta, which powers the banking platform; and Mambu, which supports the Stash Core ledger.
Why it’s worth watching: Only a few neobanks have built their own core banking platform, like Current and One. Many rely on core services from fintechs like FIS, Fiserv, and Jack Henry. But partnerships with fintechs are now drawing increased scrutiny,
The more operations that a neobank can control, the less it exposes itself to third-party risk.
Core banking on the cloud: One notable detail went missing from the press release: Was Stash Core developed using cloud technology? Mambu, which is powering the ledger, is a cloud-first partner, and many of the connections to Stash Core are made through APIs, but it’s unclear where Stash Core itself is housed. Stash could have missed out on a big opportunity.
Our take: Less reliance on fintech partners and reduced exposure to third-party risk could also spare Stash from increased levels of regulatory scrutiny. And though it’s not clear whether Stash Core lives in the cloud, the core banking platform will provide value if Stash decides to seek a buyer if it runs into trouble (less than 5% of neobanks are able to break even). Newly launched or recently formed neobanks with strong tech resources could take a page from Stash’s playbook and differentiate themselves with a proprietary core banking platform.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.