ModernFi provides $18.7 million to help banks grow their deposit base

A lot has happened in banking over the past year, including The collapse of Silicon Valley Bankand this has enabled companies like ModernFi step in and provide other solutions.

The company provides local and regional banks with end-to-end deposit management capabilities, including a deposit network so bank customers can grow, retain and manage their deposit base by finding deposits, clearing funds and providing additional security to depositors.

In fact, ModernFi, founded in 2022 by Paolo Bertolotti and Adam DeVita, raised $4.5 million in seed round a month before the news about SVB.

«After SVB, after the Sign and after the First Republic, a lot of these institutions got together and said: ‘We need a better solution here. We don’t think regulators are going to make changes, and we don’t think the current solutions or the current carriers have advanced fast enough to support it,’ Paolo Bertolotti, co-founder and CEO of ModernFi, told TechCrunch. «Luckily, some people from Canapi Ventures were in those discussions and knew about us, so we started talking.»

That continued relationship eventually led to a new round of funding that ModernFi announced today of $18.7 million in Series A funding.

Canapi Ventures led the round and was joined by Andreessen Horowitz, Remarkable Ventures and a group of banks including Huntington National Bank, First Horizon and Regions. In total, the company has raised more than $23 million in venture capital.

Bertolotti labeled 2022 and 2023 as «unique and quite significant» years, citing rising interest rates that resulted in «some of the most aggressive deposit outflows in history,» along with the collapse of SVB and others.

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«You are left with a situation that has disproportionately affected small and medium-sized banks,» he said. “In this whole notion of deposit growth, retention management has become the first, second and third priority for many institutions. We were very fortunate to be in a position to help depository networks and institutions weather that storm and continue their growth and trajectory.”

ModernFi earns basis points based on deposits in the network, and Bertolotti said 2023 was a «very good year» but declined to go into specifics beyond that. Between the seed round and the Series A round, the company doubled its headcount and the number of supported institutions «grew significantly.»

In the meantime, the new capital will be invested in growth — the team and organizational structure. Bertolotti plans to grow in engineering, new product development, compliance and business development. Part of that product development will include more integrations and API development.

«We will be expanding and doubling down on those initiatives while ensuring that our analytics suite is fully operational,» Bertolotti said. “We’re also working on asset and liability management and deposit analysis at the account level, so there’s a huge range of features and products we’ll be working on. The broader goal is to support the entire lifecycle and workflow for bank CFOs. It’s a huge undertaking, but it’s a journey we’re very excited about.”

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