The news: Major payments firms and fintechs noted that their businesses were mostly uninterrupted despite some close ties with now-collapsed Silicon Valley Bank, per Payments Dive.
Key context: SVB’s fall and Signature Bank’s collapse triggered a deluge of payment issues for startups and contagion fears for the broader financial sector.
The bigger picture: With SVB gone, there’s an influx of startups among its former 40,000 customers looking for a new bank. Some have turned to traditional banks, hoping a more established lender will be less likely to face SVB’s fate. However, many are still getting the cold shoulder from those large banks, and their account opening times can be longer than startup-focused lenders. Some banks are requiring a minimum $10 million in account deposits. Firms like JPMorgan and Morgan Stanley generally only work with companies that have more than $20 million in the bank, startup and venture capital investor Dylan Itzikowitz told PitchBook.
With few options left, startups’ choice of a bank will depend on what they value. They may decide it’s easier to leave their deposits at the newly created Silicon Valley Bridge Bank and avoid using Wall Street lenders for now. Or they may turn to smaller players—like regional and community banks—which likely lack the same level of perceived stability that larger multinationals have, but might be better at catering to their needs.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
11 Times SquareNew York, NY 100361-800-405-0844