Money20/20: Blackcat on How it is Fixing BaaS for Fintechs
Blackcat is positioning a new correspondent services model for regulated financial institutions that need SEPA access – all without inheriting the compliance burden that weakened legacy BaaS structures.
Olegs Cernisevs, CTO of Blackcat, argues that the issue is not market demand, but the way the industry tried to force one framework to do a job it was never designed to do.
Speaking with FinTech Magazine at Money20/20 in Amsterdam, Olegs describes Blackcat first as a retail-facing business, but also as a company that has built the relevant payments stack in-house and can now offer those same elements to other financial institutions.
Blackcat’s new launch is a correspondent services product for regulated financial institutions, offering direct SEPA access through a redesigned infrastructure model.
It is aimed at solving a basic access problem for financial services firms, especially newer ones.
Olegs says Blackcat is “firstly, making payments very easy” for financial services institutions, one of the biggest challenges they face today.
“Currently – especially in Europe – you should have access to instant payments and be able to make them with euros, and that is a must,” he says.
“But it’s very hard to reach it. Since there are not many suppliers, banks are not happy to offer such services to financial institutions, especially new ones that have just registered.
“We are trying to help them.”
By offering SEPA access through direct participation and removing some of the barriers that smaller institutions face when trying to connect to the rails themselves, Blackcat is setting out to help financial institutions overcome this problem.
Why BaaS is not enough
Olegs is clear that Blackcat is more than just another banking-as-a-service (BaaS) provider.
“BaaS is usually offered to companies, not to financial institutions,” he says
In light of this, Olegs says problems begin when that model is stretched into a correspondent context – because the provider ends up taking on customers it does not truly serve.
He explains: “I have to share all the data to the second party, and after that it is a compliance problem.”
Because of this, this model is becoming less popular, and “is principally the wrong way to apply BaaS”.
“It should be old-school correspondent banking,” he adds.
So, how does the platform work?
Blackcat’s approach is built around APIs, IBAN issuance and direct payment handling.
“We offer APIs, which is easy — since you are simply implementing APIs to provide us with customer data, we issue IBAN numbers for the customers and that’s it.”
He explains that the platform then lets the partner present each customer with a personal IBAN, with fully identified flows rather than ambiguous payment descriptions.
The model, Olegs adds, can support different types of partners – including crypto businesses – and that in those cases Blackcat also helps meet travel rule requirements.
Ensuring compliance without duplication
Olegs argues that the goal is not lighter regulation but better-applied regulation.
He says: “I believe in the future we will be regulated even more – but that means you should apply this regulation in the correct way.”
It’s because of this that Olegs sees the main issue with BaaS is duplication.
“If, for example – like in BaaS – things are simply duplicated, then in reality the end customers become much more frustrated.”
In contrast, correspondent banking keeps each party focused on its own job.
Direct SEPA access
Olegs describes direct SEPA access as a structural challenge for smaller financial institutions because previous setups forced them to go through banks that often did not want the business.
For example, he shares that the European Central Bank only recently opened direct participation more widely, but the process still remained too complicated for many firms to tackle alone.
Scaling the model
For Olegs, the model scales because it is simple enough for smaller firms to adopt.
“It is scalable exactly due to simplicity,” he says. As a result, he sees a medium or small crypto exchange as more likely to integrate an API than learn how to connect directly to the central bank, manage file exchange and navigate registration complexity.
Looking ahead, Olegs expects the industry to keep moving toward simpler API-led infrastructure.
“I believe again in the future we will see the same – simplicity, APIs, et cetera,” he says, while also adding that what the market really needs is “one simple way to connect – not orchestrations”.
He argues that partners need clear, specific actions rather than huge, unwieldy integration layers.
For Blackcat, that means building payment infrastructure that is direct, understandable and easy to plug into – with the least possible friction for institutions on the other side.
