Nick Christian, head of national fintech and specialty finance at Silicon Valley Bank, wants startup founders to know that his banking service – now a division of First Citizens Bank – is back in business and raring to go.

With the family-run, North Carolina-based, First Citizens Bank holding $214 billion in total assets, $146 billion in total deposits and touting $146 billion in total liquidity as of September 30, 2023, Christian says the bank – the 15th largest in the U.S. and FDIC insured – is in a strong and stable position to serve the needs of fintech startups.

This after a dramatic, heart-thumping run on Silicon Valley Bank deposits in March of 2023 that occurred in a speedy 48 hours thanks to the efficiency of online banking, followed by a takeover of all deposits by regulators, and culminating in SVB becoming the second-largest bank failure in U.S. history. 

The fast-moving run was largely due to mismanagement of the bank’s Treasury securities portfolio – not its lending practices to fintech firms or other startups.  The Treasury securities quickly lost value as interest rates soared in the early part of the year.

Thankfully for depositors who stayed with SVB, many of whom were startup founders, the U.S. Federal Deposit Insurance Corporation came forward to fully guarantee SVB’s remaining deposits.

The result:  After being the go-to bank for startup firms and their venture investors for 40 years, SVB’s reputation took a hit.  A big one. 

Nine months later, Christian wants to make clear to potential clients that – in its latest iteration – SVB is a safe and secure place for fintech firms to park their money.

“Given our acquisition by First Citizens, the balance sheet makes Silicon Valley Bank one of the safest banks in the country,” serving the fintech community, he says.  He adds that the combined company has a total liquidity that covers uninsured deposits by 277% as of Q3, 2023.

Christian is also proud of SVB’s experienced fintech team and their overall knowledge of the fintech sector: 

“I think first and foremost, we are the most prominent bank in terms of serving fintech firms, with 40-plus professionals dedicated to the fintech practice across various areas,” says Christian, most of whom – he asserts – were with the bank before the run.  He highlights his group’s expertise in payment facilitation, embedded banking, venture debt and warehouse facilities. 

Christian himself has been with the bank for 16 years and took over the fintech leadership seven months ago.  Previously, he worked in specialty finance.

He adds: “This gives us unique insights into the sector and the ability to lead in providing the best banking services, creative lending, and the sharing of the knowledge we have of business models and the fintech market itself.”

Indeed, in October, the bank released its annual Outlook on Innovation in the Fintech Industry report that highlights important trends the fintech sector will face in 2024, including the impact of shifting interest rates, the scarcity of capital, the M&A surge that is coming in fintech, and blockchain’s new growth cycle. 

As further evidence of SVB’s “business as usual” position, Christian points to its continued work with leading fintechs such as SoFi Technologies, providing it with a $40 million lending facility, and references venture debt and warehouse facility deals in 2023 involving Achieve, Settle and Silo.  “We work with fintechs that are both large and small,” Christian says.

In Q3 of 2023, SVB reported 173 new loans and $841M in loan commitment for new and existing technology and healthcare banking clients.

“Domestically, everything remains the same,” says Christian who adds that in the realm of lending practices, “we are not transactional, we want a broader, holistic relationship with a client,” though having a deposit is not a prerequisite to obtain a loan.  Regarding rates, he says the bank remains competitive with every situation bespoke and pricing assessed through a risk perspective.

In terms of services, Christian says SVB’s fintech group remains “very active in the venture debt market” with no policy changes.  In addition, he sees his group’s expertise in warehouse lending as a key differentiator and “critical for fintech clients, especially for those firms issuing credit as it can facilitate growth.”

Other services offered include the provision of startup-specific credit cards, a VC relationship team, cash management investment products, and a cash sweep product that remains at a maximum of $250,000 per participating bank.

So what has changed?  Christian says some of the international businesses did not come over, the UK branch was acquired by HSBC, and SVB’s venture capital arm was not part of the First Citizens acquisition package. 

However, there are changes in the startup banking arena that “the new SVB” will now have to contend with.

According to data released by Kruze Consulting, an accounting and consulting firm that works with 800 startup clients, an analysis of 160 plus venture-backed startups in April found that such firms have been seeking the security of depositing their money – at least part of it – with major banks such as JP Morgan, Morgan Stanley and Bank of America. 

Even Fidelity is now active in the startup banking arena with its acquisition of Shoobx and its hire of Kristen Craft, previously SVB’s director of early-stage startups.  She now heads Fidelity for Startups.

It’s not surprising then, that according to an Insider Intelligence briefing issued in November, SVB “will face an uphill battle not only in re-establishing trust, but also in rebuilding relationships with customers who have since gotten comfortable with competitors.”

There are other changes. In February of this year, only 9 percent of startup firms maintained bank accounts at major banks, but by April, that number had skyrocketed to 72 percent.  In addition, following its acquisition of First Republic Bank, JP Morgan now commands a 60 percent market share of startup bank accounts, according to an assessment of 400 plus startups conducted by Kruze.

Startup practices have also adjusted:  Increasingly, term sheets require startups to maintain two banking relationships to insulate them from future banking failures.  The median startups now have two banking relationships versus only one in February and the average amount of cash startups keep at any single bank has dropped from over $6.25 million to $4 million since the crisis.

In such an environment, Healy Jones, vice president of finance at Kruze Consulting says that SVB’s biggest challenges will be rebuilding the brand and having adequate staff.  That said, he is starting to see some SVB rebounders, bankers that left SVB who have since returned to the firm.  “This will help them keep their service at the level where they want it,” Jones said.

Currently, Kruze Consulting puts SVB on its Best Banks for Startups list, along with JP Morgan and financial technology companies like Brex, Meow and Mercury that partner with FDIC-insured banks.  Kruze describes SVB’s banking interface as “great” and views its provision of cash management services as a plus.

Despite the growing competition in the startup banking arena, it looks like SVB has its eye on the future. 

In early 2024, SVB will launch Real-time Payment (RTP) origination functionality via its API Banking channel enabling instant loan funding and a host of other use cases.

In November, it announced that it has partnered with Open AI to create an ecosystem and founder program so that AI companies – including fintech AI companies that bank with SVB – have access to foundation models at affordable cost.

And in October, SVB announced the launch of SVB Go, its new online banking platform, rolling it out to tens of thousands of clients and expecting to reach all clients by 2024. 

The new platform aims to simplify and streamline how clients conduct day-to-day treasury management and is designed to manage cash flow, issue border and international payments, build custom reports in real-time, and mitigate risk proactively. But aside from all the technological innovation at SVB, Christian points out that, “One of the unique aspects of Silicon Valley Bank is our ability to pull the fintech ecosystem together.  We sit at the center of various players – startups, investors and service providers – and view this as a responsibility to foster community and a way to facilitate growth.”