Omnibus Accounts Helped You Scale, but at What Cost?

For early-stage fintechs, speed to market is everything. Omnibus accounts have been the go-to solution for moving fast, enabling platforms to pool funds. These accounts allow for the combined management of user assets and cash, which helps streamline operations and provides initial operational advantages by simplifying transactions and reducing complexity during their critical growth phases. But here’s the problem: those one-size-fits-all accounts weren’t designed to support scale, compliance, or enterprise-level complexity.

Now, as the fintech landscape matures, growing companies are finding themselves at an alarming crossroad. While these advantages exist, the combined nature of user assets and cash in omnibus accounts can create challenges as companies scale. Regulatory scrutiny is ramping up, enterprise clients demand total fund transparency, and the inherent fragility of omnibus structures is starting to show cracks. Simply put, what helped your fintech gain traction is now becoming its biggest liability.

If your business still operates on an omnibus account structure, the time to rethink your strategy isn’t next year or next quarter. It’s today.

What Is an Omnibus Account and Why Is It Risky?

For the uninitiated, an omnibus account is a single account where funds from multiple clients are pooled together under the name of a single custodian. Omnibus accounts are typically managed by a broker, who acts as a single entity on behalf of several people, pooling their assets for investment and trading purposes. The platform keeps track of how much each client is owed internally, through a separate ledger system.

The broker’s responsibility includes executing trades and maintaining confidentiality by not disclosing individual identities to external parties. Omnibus accounts can hold a variety of financial instruments, including cash, securities, and other financial instruments, which are managed collectively. While this setup works well in early-stage operations, its inherent simplicity belies several significant risks that can wreak havoc as your fintech scales. Unlike segregated accounts, which provide greater transparency and asset security by keeping each client’s assets separate, omnibus accounts can obscure the identities of individual clients, presenting challenges for compliance and transparency.

Key Risk Areas of Omnibus Accounts

Regulatory Scrutiny

Regulators like the FDIC, OCC, CFPB, and other regulatory authorities are tightening their grip on fintechs, demanding higher levels of fund segregation and transparency. Omnibus accounts often fail to meet these standards, putting firms at risk of audits, penalties, or worse. Regulatory authorities are particularly concerned about the potential for fraud and the need for robust security measures in omnibus account structures to protect assets and ensure compliance. Regulatory risk isn’t just about fines – it’s existential. Beyond financial penalties, regulatory findings can trigger investor pull-backs, bank partner freezes and reputational risk.

Lack of Segregation

Without true legal or operational segregation, auditing becomes nightmarish. A segregated account is an alternative structure where each client’s assets are kept separate from the company’s assets, providing a clear audit trail. The account setup for segregated accounts is more complex and often incurs higher fees, but offers the advantage of enhanced transparency and security. A missing paper trail or ambiguous allocations could lead to compliance failures and lawsuits. Companies like property management platforms, marketplaces, media and ad buying and fintechs offering wallets, payouts or cards are now expected to have real-time traceability of money flows for all clients and assets.

Enterprise Client Demands

Large clients, such as banks and enterprise platforms, can’t accept ambiguity. They want clarity, traceability, and confidence, as well as immediate access to their assets and transaction information, that their money is precisely accounted for at all times. Omnibus accounts can’t deliver that level of precision.

Operational Nightmares During Disputes

Disputes become exponentially harder to resolve when all funds and assets are pooled in a single account. Who owns what? Who’s liable for which transactions? Resolving these issues can drain your resources fast.

Omnibus accounts might save you costs and time at the beginning, but the longer they remain part of your fintech stack, the greater your exposure to these risks grows.

Real-World Examples and Industry Trends

Still unconvinced that omnibus accounts are a ticking time bomb? You’re not alone. The industry has already seen repercussions echo across fintech sectors.

Synapse’s Collapse

Synapse, once a leading BaaS middleware provider, faced a catastrophic collapse after failing to manage hundreds of millions in end-user deposits. The root cause? Their reliance on FBO (For Benefit Of) accounts—a pooled structure where user or client funds were commingled under partner banks—resulted in a breakdown of visibility, traceability, and clear ownership. This mismanagement left up to $85 million in user deposits frozen or stuck in limbo. Fintech partners were left scrambling, forced to halt operations or make urgent transitions to alternative providers.

The CFPB Takes on Buy Now, Pay Later Players

The Consumer Financial Protection Bureau (CFPB) recently released a critical report on Buy Now, Pay Later providers like Affirm and Klarna, highlighting key concerns in several areas:

• Transparency around fund ownership
• Compliance with regulations
• Data management and ledgering practices

While not all providers rely on omnibus accounts, the underlying issue remains the same: who truly owns the funds, and how are they being tracked? This reflects a growing shift as non-bank fintech companies face increasing pressure to meet the same rigorous standards as traditional banks, particularly when it comes to managing, safeguarding, and accounting of assets.

Banking as a Service Platforms in the Spotlight

The U.S. Treasury and bank regulators are tightening their focus on Banking-as-a-Service (BaaS) platforms, particularly those built on fintech partnerships leveraging omnibus account structures. In 2024, the FDIC and OCC issued updated guidance emphasizing that banks must maintain full oversight and control of money flows managed through fintech collaborations, especially when pooled or co-mingled accounts are involved. Simply serving as a “pass-through” FBO account is no longer sufficient. If you handle funds, you are now required to trace, segregate, and control them at every step. As regulatory expectations mount, diversifying banking relationships is becoming increasingly important for fintechs seeking resilience and compliance.

What Does Good Look Like?

Here’s the good news. There’s a better way to manage your fintech’s financial infrastructure. Modern account structures offer key benefits such as improved transparency, enhanced compliance, and greater operational efficiency. It starts with ditching the omnibus framework for a treasury setup that scales with you, promotes transparency, and satisfies compliance demands.

Key Features of a Modern Financial Infrastructure

Virtual Account Management

Replace omnibus accounts with virtual accounts tied to programmatically enforced sub-ledgers. This brings clear segregation of accounts while maintaining operational flexibility. After Synapse’s collapse, the fintechs and customers who already had virtual accounts in place were able to segment cleanly and avoid disruption. In contrast those without VAM struggled to isolate end-user funds, leading to regulatory and customer fallout.

Real-Time Traceability

Every transaction, every balance, every movement is tracked in real time, ensuring a crystal-clear audit trail for regulators and stakeholders alike. One of the core challenges uncovered in the CFPB’s investigation of BNPL providers was a lack of transparency around who held consumer funds and how balances moved between entities. Platforms with real-time ledgering and traceability were able to demonstrate full ownership and movement while others faced scrutiny.

KYB and KYC Segmentation

Segment by user or program while tying them to robust KYB (Know Your Business) and KYC (Know Your Customer) data to prevent compliance gaps. Many vertical SaaS platforms onboard multiple sub-businesses, vendors or clients. Without strong KYB/KYC linked sub-ledgers, these funds risk being co-mingled or unaccounted for, triggering red flags during audits or investor diligence.

Audit-Ready Infrastructure

Build an infrastructure where compliance and audits are not just obligations but ingrained into how your payments are recorded, processed, and reported. Some high-growth fintechs have reported a reduced audit prep time of 80% after adopting programmable ledgering. Instead of manually compiling flow reports, they simply export account histories tied too their virtual account structure which is already segmented, timestamped and KYB tagged.

Don’t Wait Until It Breaks

If your fintech stack still relies on an omnibus account, consider this your alarm bell. Compliance doesn’t wait. Enterprise clients won’t wait. The longer you stay on this outdated structure, the greater the risks to your reputation, finances, and client relationships.The good news is that transitioning to audit-ready treasury infrastructure doesn’t have to interrupt your operations. Solutions like Qolo’s unified stack make the process seamless, allowing you to scale confidently while reducing regulatory vulnerabilities.

Take Action Today

Don’t wait for regulators, audits, or angry enterprise clients to force your hand. Explore how audit-ready treasury infrastructure can streamline operations and future proof your fintech today.

[Discover audit-ready treasury solutions]