Even a few days later, it’s still somewhat unfathomable that a large bank and major pillar of the startup community collapsed in a mere 48 hours. Minutes mattered for businesses last week. Businesses that banked with Silicon Valley Bank had to open new accounts, move their money and accounts receivable, and they had to do it fast.
For those that aren’t well versed in Know Your Business (KYB), setting up new business banking accounts same-day is much faster than today’s standard, which is closer to a week and can take up to two weeks. This is pretty surprising given the stark contrast to consumers who can open a new bank account in just a few minutes. But this is changing; a meaningful number of banks are already offering streamlined onboarding experience to their customers and marketing these experiences as a differentiator.
Many of the aforementioned innovative banks choose to partner with Middesk because they share our vision of enabling trust between businesses to onboard and transact faster, and use us as their KYB layer. This gives us an interesting view of where businesses went to open new accounts in the wake of the SVB collapse.
An influx of new commercial account applications
Since last Wednesday, we’ve seen a 20-30% increase in volume across all our banking partners.
When we split our banking partners between traditional banks and fintech banks we saw a notable difference in their share of volume.
Traditional banks saw a 0-5% increase in their normal volume.
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Whereas fintechs & neobanks saw a 50-75% increase in volume since Wednesday. Which essentially means fintechs captured nearly 100% of the account opening requests from SVB customers.
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This is a big difference in volume. Driven by the events of last week it’s pretty clear that the thousands of startups that needed to find a new bank, likely based their decision on speed and customer experience.
As an example, here’s one ‘speedy’ customer that saw 3-4x in volume, the biggest increase we saw across our customer base, that makes a point of differentiating themselves on speed and customer experience.
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Speed is always a factor when opening a business account
Here’s the crux of it. Minutes always matter to businesses, not just in times of crisis. For the account opener, minutes matter because they have better things to do than to track down and submit their exact legal business name, the states they’re registered in and their incorporation docs, etc that you can get from SOS portals to verify their business (or Middesk can do that for you). For the bank, minutes matter because time greatly influences ROI; bad CX keeps good businesses from banking with you and inefficient processes unnecessarily use resources.
The collapse of SVB was a large-scale event that highlighted a larger shift that’s been happening in the market. Businesses are taking notice of which banks are putting an emphasis on b2b customer experience and onboarding, and it's becoming a larger part of their selection criteria.
Middesk is the business identity platform that enables businesses to onboard and transact.
