Multibank Network helps FinTechs avoid “One Basket”

If the past week has taught us anything, it’s not to put all your eggs in one basket.

This applies especially to FinTechs and tech startups, the backbone of innovation in financial services.

Many of them are trying to find new providers of financial services. And not sure where to turn.

Simply put, FinTechs need a way to work with and within the banking system while moving money safely and securely.

Treasury Prime CEO Chris Dean told PYMNTS’ Karen Webster in a recent conversation that banks (like any other business) have vulnerabilities – the problem is when clients put their proverbial eggs in one basket.

“It’s the concentration risk, which we’re all seeing now. It’s the operational burden. And you have to get those things right. It’s clear to me that there’s not a single bank in the United States that can do that — but the American banking system can.”

Of banking in general, he said, “there are a lot of different regulators and different banks — and they’re held together in a cohesive whole.” Treasury Prime’s goal, he said, is to make this connection available in a streamlined way to the FinTech community.

To that end — to connect FinTechs to the banking system rather than just a vendor or two — Treasury Prime said Wednesday that it has officially launched OneKey Banking.

It is an embedded financial application programming interface (API) billed as a solution that allows FinTechs and enterprises to select the best banking partner, across the more than 15 financial institutions (FIs) connected to the Treasury Prime network, for a specific product or service .

The network effect, Dean said, allows these enterprises to shift away from relying on a single BaaS provider and move money between banking partners instantly. And within this cross-network functionality, businesses can better manage deposits, transfer funds and send instant payments while managing accounts between banks.

The Treasury Prime network, he said, has banks that range in size from top 20 players to smaller, more nimble banks. Depending on the FinTech use case, money can be moved seamlessly across different banking providers.

“Generally,” he said, “it’s hard to open a bank account, but it’s easy here … and it’s easy to open multiple bank accounts at the same time.”

It’s the latest move to unlock the potential of a network built over years, with real-time integration of back-end systems and a growing list of traditional FIs on one side and digital-only upstarts on the other.

Diversification for the banks too

Dean said the OneKey offering also has inherent benefits for financial institutions, allowing them to grow deposits and find the right FinTech partners.

“There has been a lot of in-depth interest from banks,” he observed, who are interested in advancing their innovation roadmaps and partnering with FinTechs through a standard API. “Banks are good at managing their customers and realizing where their customers are going.

They see FinTechs growing dramatically, and embedded banking, with different businesses, growing dramatically as well. And the banks will be on board… this is a channel that allows them to get the ‘best’ FinTechs.”

In a nod to the governance and operational risk concerns that have become so dominant in finance these days, Dean noted that there is a rigorous internal vetting process for banks joining the network.

“We’re always open to new banks,” Dean said, “but we don’t say yes to everyone. If there’s a bank that we think is ready to handle the complexities of a FinTech relationship, that’s the one we want.”

Volume and scale of recovery

Demand for the two-sided network flexibility (and the benefits of diversification for both sides), Dean noted, is evident in the fact that in its first month, OneKey Banking enabled more than $350 million across multiple Treasury Prime network banking partners. The collapse of Silicon Valley Bank, Silvergate and Signature banks has only served as a tailwind to that activity, and billions more in deposits are likely to come by the summer as FinTechs seek to leverage OneKey to help them manage day-to-day fund flows and operations .

“We launched,” he recalled to Webster, “and we were in beta with a couple of clients for a while—and everything worked great. And then [the banks collapsed]. What does it all mean? It means that all the FinTechs are knocking on our door saying “how can we get involved in the network so that we don’t have the same concentration risk?”

Looking ahead, he said Treasury Prime will seek to add banks to its list with functions or concentrations not yet on the network. Some banks, he said, focus on retail clients, while others make their niche serving international clientele (and have currency expertise).

“Chance favors the prepared,” he said. – We have been working on this for years. The whole point is that there is no bank that is big enough and complex enough to handle all possible problems. But the network itself can – and that is the key.”