The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing

Scot Lenoir turned a sleepy farming bank in Arkansas into one of Silicon Valley’s top financial partners. Now it is in crisis mode and some clients have started pulling funds after a business partner failed and thousands of customers couldn’t access their money.

Evolve Bank at its peak managed around $10 billion for financial technology firms, including Stripe and Affirm. It caters to fintechs that offer technologically friendly savings accounts for everyday people with sweeteners like high interest rates. Most fintechs don’t hold their customers’ funds and instead use banks like Evolve in the background.

Problems at the bank spilled into the open when a software company called Synapse went bankrupt in April. Synapse connected fintechs to banks like Evolve to store their own customers’ funds. Synapse’s job was to ensure that everyone’s funds were accounted for, while Evolve would open accounts and issue debit cards to the customers. The funds of over 100,000 fintech customers were kept in large, commingled accounts under Synapse’s management at Evolve, its primary bank partner for years.

After Synapse filed for bankruptcy, thousands of customers suddenly couldn’t use their debit cards or move money out of their accounts at Evolve.