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SVB's programmatic payment systems are back online

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Re: SVB's programmatic payment systems are back online

#21

Post by kentonv »

tempsy wrote: post #17
churchill wrote: post #13

I wonder why no one has said it yet but Mercury will come out the biggest winner from this mess. I can't estimate how the traffic from SVB > Mercury has been but I saw a post by Arc.tech saying they'd received hundreds of millions in deposits between 8 - 10 March. Given Mercury was a more popular contender, I'm going to bet they had an inflow of basically double-digit billions.

Why would anyone go from midsized public bank to opaque neobank if they're now spooked about bank solvency issues? The logical move is to go bigger eg JPM.

Because (apparently; I'm just reading from their web site) they deposit your funds into 12 separate accounts at 12 separate FDIC banks so you are insured up to $3M and a single-bank failure can at worst take 1/12 of your deposits.

Seems like services like this should be more popular.

Re: SVB's programmatic payment systems are back online

#22

Post by snuxoll »

tempsy wrote: post #17
churchill wrote: post #13

I wonder why no one has said it yet but Mercury will come out the biggest winner from this mess. I can't estimate how the traffic from SVB > Mercury has been but I saw a post by Arc.tech saying they'd received hundreds of millions in deposits between 8 - 10 March. Given Mercury was a more popular contender, I'm going to bet they had an inflow of basically double-digit billions.

Why would anyone go from midsized public bank to opaque neobank if they're now spooked about bank solvency issues? The logical move is to go bigger eg JPM.

Mercury just announced a new cash management / CDARS account to provide up to $3mm of FDIC coverage through 12 partner banks, with plans for potentially more. I would hope the lesson from SVB's collapse is don't put your eggs all in one basket, not put them in the biggest basket you can find.

(That said, said service to split your eggs up doesn't need to be Mercury - they're just the VC-backed startup darling here. There's plenty of other banks that offer these services.).

Re: SVB's programmatic payment systems are back online

#23

Post by randoengy »

chatmasta wrote: post #8
rexreed wrote: post #7

Earlier quoted context omitted.

Always have a backup. I have 2 corporate bank accounts (at least). Neither of them are SVB. Chase is solid. Avoid shiny objects. Startups have enough risk in their daily existence, the last thing you need is to introduce unnecessary risk. Be a revolutionary where it matters. Be boring, steady, and predictable everywhere else.

Brex has been promoting their business checking account, and claims it's FDIC insured up to $2.25m. Anyone moving there?

Moved there last year, extremely happy with them.

Re: SVB's programmatic payment systems are back online

#24

Post by HPMOR »

robertlagrant wrote: post #15
HPMOR wrote: post #4

Earlier quoted context omitted.

It is not urgent. All depositors assets, uninsured & insured, are being backstopped by the Treasury. No need to worry if your assets are being held by the FDIC receivership. Now, if your assets are at First Republic, there might be some concern, but I believe that the Treasury has sent a strong signal that depositors will be made whole.

What does "sent a strong signal" mean in reality?

You're right, "sent a strong signal" is deliberately ambiguous, in the sense that there has not been a declared policy shift of the FDIC to protect uninsured deposits. However, given that SVB and Signature were not previously declared Systematically Important Banks, yet all of their depositors were made whole, should give depositors confidence that that the Federal Government will see they are protected.

Now, whether the FDIC should make this a declared policy position remains to be seen, but I believe that would require congressional action.

Re: SVB's programmatic payment systems are back online

#25

Post by partiallypro »

churchill wrote: post #13

I wonder why no one has said it yet but Mercury will come out the biggest winner from this mess. I can't estimate how the traffic from SVB > Mercury has been but I saw a post by Arc.tech saying they'd received hundreds of millions in deposits between 8 - 10 March. Given Mercury was a more popular contender, I'm going to bet they had an inflow of basically double-digit billions.

But mass inflows of deposits are exactly how SVB got into the situation it's in now. You have to pay interest on the deposits. I'd much rather go to a truly "too big to fail" bank that can easily cover the deposit interest with a diverse line of business.

Re: SVB's programmatic payment systems are back online

#26

Post by rexreed »

chatmasta wrote: post #8
rexreed wrote: post #7

Earlier quoted context omitted.

Always have a backup. I have 2 corporate bank accounts (at least). Neither of them are SVB. Chase is solid. Avoid shiny objects. Startups have enough risk in their daily existence, the last thing you need is to introduce unnecessary risk. Be a revolutionary where it matters. Be boring, steady, and predictable everywhere else.

Brex has been promoting their business checking account, and claims it's FDIC insured up to $2.25m. Anyone moving there?

Personally, I'd stay with a "boring" bank for at least one account. You can always open more than one account. Don't put all your eggs in one basket. Brex sure, but they could be a flash in the pan. Have "boring" banks as a backup. I bank with Chase and a local FCU in addition to anything else.

Also, Brex isn't a bank. They make this very clear: https://www.brex.com/support/is-brex-cash-a-bank-account

You should read carefully for anything where you put your hard-earned money.

"Brex Cash is not a bank account; it is a cash management account offered by Brex Treasury (a FINRA-registered broker-dealer) that functions very much like a business bank account.

You can use your Brex Cash account to securely deposit checks (including via mobile app); send and receive payments via ACH, check, and wire—even internationally; and manage spend for your company’s different users.

Brex Cash also allows you to choose how your money is stored. You can elect to keep your deposits at a Brex partner bank, and if you do, you’ll be eligible for FDIC insurance up to $2,250,000 in total. The other option is to invest your deposits into a government money market mutual fund. You can also use any combination of these two options.

No matter how you choose to store your funds, your Brex account gives you unlimited corporate credit cards for secure, convenient spending. The cards are automatically paid daily like a debit card—while giving you cash back on every purchase and building your business credit.

Note: Unlike debit cards, Brex cards cannot be used to make cash deposits or ATM withdrawals."

Your FDIC insurance and exposure is entirely up to you at Brex.

Re: SVB's programmatic payment systems are back online

#27

Post by Zetice »

richardlblair wrote: post #5
chatmasta wrote: post #3

Brex and Gusto have been nagging us to setup a new bank account, but is this urgently necessary if SVB ACH is operating normally now? What are other people doing? We'll obviously open a new account eventually but it doesn't seem urgent?

If I was a founder in the US right now I'd be opening at least 1 other bank account today and getting at least half my funds into that account. I would also never operate without at least 2 bank accounts. Operating a business and having employees is a huge responsibility. If people are depending on you to manage the risk of your business so they can buy groceries it's important to take that as seriously as you can.

Does Gusto/Workday make pulling from multiple banks transparent? Seems like a value add for them to add in a way to seamlessly pull evenly from multiple accounts, and doesn't immediately strike me as overly difficult from a technical perspective.

Re: SVB's programmatic payment systems are back online

#28

Post by ghc »

kentonv wrote: post #21
tempsy wrote: post #17

Earlier quoted context omitted.

Why would anyone go from midsized public bank to opaque neobank if they're now spooked about bank solvency issues? The logical move is to go bigger eg JPM.

Because (apparently; I'm just reading from their web site) they deposit your funds into 12 separate accounts at 12 separate FDIC banks so you are insured up to $3M and a single-bank failure can at worst take 1/12 of your deposits. Seems like services like this should be more popular.

It's called an Insured Cash Sweep and most banks offer it: https://en.wikipedia.org/wiki/Insured_Cash_Sweep

The problem here is one of fiscal immaturity at startups. SVB offered ICS accounts but from what I'm seeing few startups put their money into them. My bet is that startups mature enough to have a proper CFO weren't as impacted by this mess.

Re: SVB's programmatic payment systems are back online

#29

Post by acomar »

kentonv wrote: post #21
tempsy wrote: post #17

Earlier quoted context omitted.

Why would anyone go from midsized public bank to opaque neobank if they're now spooked about bank solvency issues? The logical move is to go bigger eg JPM.

Because (apparently; I'm just reading from their web site) they deposit your funds into 12 separate accounts at 12 separate FDIC banks so you are insured up to $3M and a single-bank failure can at worst take 1/12 of your deposits. Seems like services like this should be more popular.

from what I've read, they're a standard practice in traditional finance/risk management circles? it's what makes the whole situation with SVB so much more mind-bending. this isn't some new technology that's never existed before. why were VCs insisting that money had to be held at SVB, knowing that by doing so, they'd put their funded companies above FDIC insurance thresholds?

was it incompetence or greed?

Re: SVB's programmatic payment systems are back online

#30

Post by TrainedMonkey »

partiallypro wrote: post #25
churchill wrote: post #13

I wonder why no one has said it yet but Mercury will come out the biggest winner from this mess. I can't estimate how the traffic from SVB > Mercury has been but I saw a post by Arc.tech saying they'd received hundreds of millions in deposits between 8 - 10 March. Given Mercury was a more popular contender, I'm going to bet they had an inflow of basically double-digit billions.

But mass inflows of deposits are exactly how SVB got into the situation it's in now. You have to pay interest on the deposits. I'd much rather go to a truly "too big to fail" bank that can easily cover the deposit interest with a diverse line of business.

Interest rates are already high, so whoever get the inflows can buy 3 months treasure notes to get the cake and eat it too.

There is still risk of interest rates rising significantly higher, but with 3 months treasure notes the downside is limited.

edit: typoed

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