TabaPay’s failed acquisition of Synapse Financial in 2024 led it to pursue a different strategy: buying a bank. CEO Rodney Robinson said the idea originated from examining Synapse’s lending licenses and brokerage services.
“But we couldn’t do everything we wanted to do with that, so [buying] a bank was the next logical choice,” Robinson said at the Money20/20 conference in Las Vegas.
From missed opportunity to bank acquisition
In September, TabaPay announced plans to acquire Denver-based Transact Bank. The deal, two years in the making, began when a team member noticed a “for sale” sign in Transact’s branch window. While the sign was for the building, it turned out the bank was also available.
Synapse had initially caught TabaPay’s attention with its in-house issuing platform, lending licenses, and captive brokerage. However, over a year of negotiations fell apart before TabaPay nearly acquired Synapse out of bankruptcy in April 2024.
“We walked away because the books were a mess,” Robinson said. “The technology was interesting, but you couldn’t separate the two.”
Ultimately, buying Synapse would have been “a half measure,” he said. “So we learned to go full measure and get a bank.”
Regulatory approvals and future plans
The Transact Bank deal is expected to close in the fourth quarter, pending regulatory approval. Afterward, the bank will be renamed TabaBank and operate under TabaHoldings, a newly formed bank holding company. Robinson anticipates TabaBank will be operational by April.
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TabaPay has been working with the Federal Reserve and the Office of the Comptroller of the Currency for approximately two years. To prepare for the transition, it has formed a board comprising 50% bankers and 50% fintech professionals.
“We had to change the nature of the company from a fintech company to a bank holding company,” Robinson said. “We put on a very, very transparent management structure in the company. I think it’s a much better way to manage the company.”
TabaBank will maintain Transact Bank’s focus on the payments sector, as Transact has been owned by European payments processor Transact Pro since 2018.
Expanding reach and partnerships
TabaBank will keep its Denver branch and open a new location on Cambridge Avenue in Palo Alto, California. “We’re going to be a fintech-focused bank in the middle of Silicon Valley,” Robinson said. “You have all the venture companies in Silicon Valley that fund fintech, and they need a partner bank. We’re sitting just right down the street from all those companies.”
TabaPay’s existing 20 partner banks will remain integral to the business, providing capacity and diversification. “We’re going to keep on growing with them,” he said. “The proposed TabaBank “is about delivering all products out of one bank and innovation in the market, so you’re going to see unique parts of acquiring out of our bank, but our partner banks are great. We’re going to keep on doing business with them.”
TabaBank will serve payment facilitators and independent sales organizations. Partner banks will retain TabaPay’s cross-border payments business and process payments for some of its largest merchants, Robinson said.
