Metropolitan Bank Holding in New York is getting out of Banking-as-a-Service.
The $7.1 billion-asset company disclosed in a regulatory filing that it decided early this year to exit all BaaS relationships. Metropolitan said that deposits obtained through BaaS relationships totaled $781 million, or 13.6% of deposits, at Dec. 31.
Though Metropolitan expects “minimal financial impact” from the exit, the filing cautioned that the bank may have to seek “alternative and potentially higher-rate funding sources” if it cannot replace the BaaS deposits.
“We expect to incur a number of other costs associated with the exit … through at least the end of 2024, including those related to notifying customers and other interested parties of our decision to exit such relationships,” the filing added.
Metropolitan said the exit will reduce its exposure to “heightened, and evolving, regulatory standards.”
The decision comes a year after the company disclosed plans to fully exit the crypto-asset business. Metropolitan also decided to exit all consumer-facing businesses.