The news: The Consumer Financial Protection Bureau (CFPB) will use $46 million from its Civil Penalty Fund to compensate customers who lost access to their deposits when the banking as a service (BaaS) platform Synapse failed. It’s unlikely that all customers will be made whole: The CFPB has estimated a deposit shortful of up to $90 million following the company’s collapse.

Why it’s worth watching: In August, the CFPB filed a complaint and proposed a final judgment against Synapse, alleging violations of the Dodd-Frank Act for failing to maintain adequate records. A negligible civil penalty allowed the CFPB to use its fund to compensate affected consumers.

The aftermath of Synapse’s collapse has been messy. Multiple partner banks were named in a 2024 class action lawsuit as customers struggled to recover funds deposited through Synapse-backed fintechs and its sponsor banks. While this saga plays out, some major fintechs have changed banking partners or distanced themselves from sponsor banks altogether, likely reworking their underlying technology in the process.

Our take: Consumers’ trust in financial services providers is delicate—and outright low among Gen Z. Banks have a regulatory duty to keep reliable customer records and meet compliance requirements, and the storm surrounding Synapse underscores the risk of outpacing operational capabilities.

As banks pursue new business models and faster growth, safety and soundness must remain the priority, supported by the right tools and controls.