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An Interesting Fintech Play in the Wake of SVB

Albert Bodine by Albert Bodine
March 31, 2023
in Analysts Coverage, Fintech
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Google Hits the Reset Button on Its Fintech Strategy

Google Hits the Reset Button on Its Fintech Strategy

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Industrifonden, a Swedish venture capital fund announced a $3 million growth funding round for Open Payments, a company that connects SMEs to multiple banks through a single unified API. That connection can then be used to interface directly with the SME’s accounting and ERP systems thus enabling the SMEs to avoid having to log into each bank’s online payments system.

“Open Payments claims to be one of the leading open banking platforms in the Nordics with a focus on B2B transactions,” according to Fintech Global.

In the wake of the SVB debacle, one of the primary complaints about balance loading—ensuring that deposits are spread out to numerous banks to take advantage of the $250,000 FDIC deposit limitation per institution—is the workload behind having multiple bank systems and portals to manage. While Open Payments has not put this value proposition on their marquee, it’s certainly something that they should be talking about. This may not be music to the ears of U.S. banks that house massive corporate deposits, but until the FDIC threshold rises to a level more meaningful to corporates—or the use of those deposits is subject to tighter scrutiny—fintech plays like Open Payments have a stop gap.

The current U.S. administration stepped in to make SVB depositors whole, but this is certainly not the standard. Take note that around 85% of the deposits at SVB were not insured based on FDIC guidelines. Twenty-twenty hindsight provided an impetus for looking at a new FDIC structure, SVB execs are in front of Congress for their obligatory beating and nobody has a great answer on how the maturity level of SVB’s bond purchases and cash needs could have been synchronized. It’s not likely that we will see a meaningful change in the FDIC approach for corporates anytime soon and SMEs, especially startups, are running lean and mean. But SMEs need to pay their employees and vendors, and they need to keep those deposits secure. Fintech may have an answer.

Overview by Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research.

Tags: APIFDICFintechSilicon Valley BankSME
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