An inside view into how a legacy bank is quietly rewriting the future of fintech—removing layers, not adding them. A conversation rooted in strategy, not spectacle.
Brooke, the banking industry is undergoing rapid transformation, especially in payments and digital banking. From your vantage point, what are the most significant shifts shaping the industry today?
The financial ecosystem is evolving at an unprecedented pace, with payments at the heart of this transformation. The expectation for real-time money movement has become non-negotiable—whether it’s payroll, business transactions, or consumer payments. People and businesses want immediate access to their money, and financial institutions must meet this demand or risk obsolescence.
At First International Bank & Trust, we recognize that payments are the foundation of banking. Through our Kotapay division, we’ve built a payments-first mindset that ensures our solutions—whether real-time payments, traditional card rails, or virtual payment innovations—are seamlessly integrated, scalable, and ready to support businesses navigating this shift.
First International Bank & Trust recently introduced Kavinu, a direct-to-bank BaaS platform. What inspired its development, and how does it stand apart from other BaaS offerings in the market?
Kavinu was born out of a clear industry need: a more sustainable and stable Banking-as-a-Service (BaaS) model. The first generation of BaaS providers attempted to rapidly connect fintechs to banking services but often relied on layers of middleware, creating unnecessary risk, operational friction, and compliance uncertainty.
At FIBT, we took a different approach. Kavinu is built on a ‘BaaS 2.0’ framework—one that eliminates the middleware and instead offers a direct-to-bank relationship. This means fintechs and businesses are no longer dependent on multiple third-party providers but instead connect directly with an established, chartered bank that understands regulatory requirements and provides a secure, scalable infrastructure.
In short, Kavinu isn’t just about speed to market; it’s about ensuring that fintechs and embedded finance providers can innovate with confidence, knowing they have a direct, compliant, and resilient banking partner behind them.
FIBT has a strong foundation in payments through its Kotapay division. How has that expertise influenced the approach to building a more robust Banking-as-a-Service model?
Payments expertise is what differentiates a truly sustainable BaaS model from one that merely facilitates account creation. FIBT’s Kotapay division, has spent decades mastering scalable money movement—ensuring that funds flow securely, efficiently, and in compliance with evolving regulations.
Many early BaaS platforms were designed primarily around deposit accounts, lacking the deep understanding of payments infrastructure needed to support real-time financial ecosystems. With Kavinu, we’ve taken a payments-first approach, embedding ACH, real-time transactions, and other mission-critical functionalities directly into the model.
This means fintechs and businesses that partner with us aren’t just getting access to a bank—they’re gaining a partner with deep operational experience in money movement, compliance, and scalability.
Middleware providers have played a major role in BaaS, but you’ve emphasized the need for a direct-to-bank approach. What are the key advantages of eliminating middleware in these programs?
The early BaaS landscape was largely defined by middleware providers that attempted to bridge the gap between banks and fintechs. While this facilitated rapid growth, it also introduced fragmentation, compliance vulnerabilities, and inefficiencies that ultimately hindered the industry.
By eliminating middleware, we remove these friction points and create a direct, bank-led ecosystem where fintechs engage with a chartered financial institution from day one. This ensures:
- Stronger regulatory alignment: A direct banking relationship means compliance is built in from the start, rather than being an afterthought.
- Greater operational stability: Middleware providers often create dependencies that fintechs can’t control. With a direct bank model, fintechs gain long-term infrastructure they can rely on.
- More transparent risk management: Every transaction flows through FIBT’s risk and oversight framework, ensuring that fintech innovation happens within a secure, well-regulated structure.
This isn’t just an evolution—it’s a necessary shift for the longevity and credibility of BaaS as an industry.
Regulators have been scrutinizing BaaS models, particularly around oversight and risk management. How does Kavinu ensure compliance while still fostering innovation?
At its core, Kavinu was designed to align fintech innovation with regulatory responsibility. Unlike first-generation BaaS models that often relied on third parties to manage risk, Kavinu ensures compliance by embedding fintechs directly into FIBT’s well-established banking framework.
This means:
- A direct banking relationship ensures that all transactions align with federal and state banking regulations from inception.
- Robust risk oversight is integrated into the platform, allowing fintechs to operate with confidence while maintaining compliance with evolving regulatory expectations.
- Scalable, sustainable infrastructure supports long-term fintech growth without the compliance pitfalls that have historically led to regulatory intervention in the BaaS space.
For fintechs, this means a more secure pathway to innovation—one that doesn’t sacrifice compliance for speed.
The intersection of technology and regulation in banking is becoming more complex. What steps should financial institutions take to balance agility with regulatory responsibilities?
Bankers have long understood the need to move money faster, but are held back by outdated infrastructure, evolving regulations, and rising fraud threats. Financial institutions have also been hampered by the false dichotomy that suggests compliance and security cannot coexist with innovation and speed. To effectively respond to customers’ expectations for quicker transactions, we must pair these seemingly opposing approaches. When banks partner with fintechs to develop embedded finance offerings and real-time payment capabilities, both the American financial ecosystem and its customers reap the benefits of solutions that are both secure and efficient.
Looking ahead to 2025, what major trends do you foresee in digital banking and the broader payments ecosystem?
Bank-fintech partnerships will continue to prosper. I expect to see increasing engagement between traditional banks and the fintech ecosystem as the industry recognizes the value of collaborating on payments and fintech innovation.
Secondly, as employees demand faster payments, businesses must keep real-time payments top-of-mind to attract talent and retain top performers. In too many cases, payroll technology is antiquated. A recent industry study reported just 36% of freelancers and consultants are paid most often using instant payment methods, even though it’s a preferred payment method by 72% of consumers. RTP will test the continued adoption of earned wage access, as actual payroll (not advances on accrued wages) becomes available earlier and without requiring adoption of additional financial products, such as prepaid cards, or additional fees to access funds.
For fintechs and businesses looking to integrate banking services, what should they consider when choosing a BaaS partner, especially in light of shifting regulatory expectations?
Fintechs and businesses integrating banking services should consider a few key factors when choosing a BaaS partner, especially in a shifting regulatory environment. Fintechs should be asking:
- Does this BaaS provider operate within a direct bank charter model, or are they reliant on middleware?
- Is compliance built into the foundation, or is it being managed through a third party?
- Does the partner have deep payments expertise, or are they only focused on deposit accounts?
- Will this platform scale sustainably, even in an evolving regulatory landscape?
Choosing a BaaS partner isn’t just about getting to market quickly—it’s about ensuring long-term success with a stable, compliant, and experienced financial partner.
The role of traditional banks in fintech partnerships continues to evolve. How do you see banks redefining their value proposition in the era of embedded finance?
Banks are no longer just service providers in fintech partnerships. They’ve become key drivers of innovation and growth. By leveraging their existing business relationships, forward-thinking banks are strategically positioning themselves to offer embedded financial solutions to help expand their role in the financial ecosystem. At the same time, they’re developing more intuitive platform experiences that align with the types of experiences customers expect.
As BaaS continues to gain momentum, how do you envision the future of financial services? What innovations or shifts do you expect to reshape the industry over the next decade?
The next decade will be defined by payments innovation, regulatory stability, and deeper fintech-bank partnerships. The focus will be on making money movement faster, safer, and more intuitive while ensuring that compliance remains a foundational pillar, not an afterthought.
At Kotapay and FIBT, we’re committed to leading this next wave—not just by offering BaaS, but by redefining it through Kavinu’s direct banking model. The future isn’t about shortcuts. It’s about sustainable, strategic growth that benefits fintechs, businesses, and consumers alike.
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