Silicon Valley Bank (SVB) experienced a significant collapse back in March, leaving startups and investors scrambling to find an alternative banking solution. This event sparked a wave in the banking industry and created a gap that needed to be filled. However, according to SVB’s Commercial Banking President, Marc Cadieux, the bank is bouncing back and inviting its clients to return.
Key Takeaway
In the aftermath of SVB’s collapse, other players in the banking industry are stepping up to offer startups and investors new alternatives.
The Importance of Culture
Cadieux emphasized the significance of culture during this tumultuous period. He highlighted that when things went awry, SVB’s reflexes kicked in, and the team worked tirelessly to navigate the challenges. It was a hectic and chaotic experience, but the bank managed to pull through.
New Opportunities
While SVB was dealing with the aftermath, Mercury and Piermont Bank found themselves inundated with phone calls from concerned startups looking for a new banking home. Mercury witnessed an influx of $2 billion and 3,000 customers in a short period. Piermont Bank, being a digital-only banking institution, swiftly opened accounts in hours rather than days.
Improving the Banking Experience
According to Immad Akhund, co-founder and CEO of Mercury, there is significant room for improvement in the banking industry. Mercury, an emerging player, is continuously launching new products and aiming to redefine banking. They recently introduced Mercury Raise, a free suite of tools and programs for founders seeking to raise capital.
Reassuring Clients
Amidst the changes, SVB’s Cadieux is working on reactivating clients who left or had reduced balances. He is assuring them that the bank is still open for business and urging them to return. Cadieux expressed that SVB has been successful in this endeavor so far.
Understanding Startup Needs
Wendy Cai-Lee, founder and CEO of Piermont Bank, highlighted the importance of banks being willing to offer the right products and recalibrate them to meet the specific needs of startups. Fintech companies, like Mercury, excel in this area by focusing on user experience and understanding the need for speed in execution. This sets them apart from traditional banks.
Choosing the Right Banking Partner
Melissa Smith from J.P. Morgan Commercial Banking emphasized that startups should have access to the best products without having to jump through hoops. She suggested that startups consider managing counterparty risk and explore off balance sheet liquidity options. As startups grow, it may become necessary to work with multiple banking partners to accommodate their expanding financing needs.
Ultimately, the most critical factor in choosing a banking partner is safety and stability for the startup.
