Silicon Valley Bank famously collapsed back in March, setting off a wave across the banking world and left startups and investors alike scrambling to find a new place to put their money.
Four players in the banking industry spoke on the TechCrunch Disrupt Fintech Stage about how they are filling the gap left by that version of SVB and what they are doing to offer startups and investors new alternatives in a post-SVB world.
On the panel were:
To SVB’s Cadieux, March 9 through that weekend was “a great study in why culture matters.”
“By Friday, things had already gone very much sideways,” Cadieux said. “Ultimately, reflexes took over. ‘All hands on deck’ probably wouldn’t even do it justice. It was a very hectic, chaotic 4,872 hours of figuring it all out.”
For Mercury’s Akhund and Piermont Bank’s Cai-Lee, that weekend was a different story. For both of them, all of a sudden, both entities were inundated with phone calls from concerned startups trying to find a new home for their money.
Mercury saw $2 billion and 3,000 customers come its way in a short period of time, which grew from there, Akhund said. Over at Piermont, it was all about a frenzy of just opening accounts. Fortunately, since Piermont was “The first true digital-only bank,” according to Cai-Lee, it was able to open accounts in hours rather than days.
Other takeaways:
Akhund: “There’s just so much room to improve banking. Banking should be amazing. We’re launching things every week. It’s just a very different view on what is banking? That’s the future. We only started four-and-a-half years ago, and we’ve gone from zero to having a significant share of startups.” He also referenced Mercury’s new product, Mercury Raise, which launched today to offer a free suite of tools, programs and networks for founders looking to raise capital.
Cadieux: “I’m certain that the client count is probably a bit less. What muddies the waters a little bit is that we have clients that we were considering if their balances post arc event dropped to 10% or less. We consider them to be exited, but also consider them candidates for reactivation. Unsurprisingly, what we’ve been doing ever since reopening with First Citizens is working with those clients to reassure them we’re still here, we’re open for business. ‘Come on back, the water’s fine.’ We are having a great degree of success with that so far.”
Cai-Lee: “At the end of the day, as a regulator of a banking institution, from a product standpoint, most of us have the same products. It’s about do they have the product, but more importantly, are they willing to offer you that product? Maybe only for larger companies, less startups. And the most important question, is that can they recalibrate it to your needs. For example, can they prioritize you — the startup — because that comes to the execution, the implementation part. This is where I want to give credit where credit’s due. That’s why fintechs, like Mercury, do so much better from that user experience standpoint. They understand the need for speed. Can the bank actually work at your speed and understand your pain points? That’s really the difference. It’s not the product.”
Smith: “People should get the best product. They shouldn’t have to jump through hoops to get it. I would certainly argue as many people would agree that for a startup specifically, it is often going to be inefficient to have to manage multiple banking partners, particularly for a team that is lean and mean and with no finance staff, per se. I do think, as one thinks about managing counterparty risk, some of the off balance sheet liquidity options that are available through sweeps and that sort of thing, are a good option for a startup. As the company grows and scales, it would make more sense to be thinking about multiple providers. That’s usually when your financing needs also have come to grow and scale. The most important point in choosing that banking partner is safety and stability.”
Source @TechCrunch
