Hey fintech friends,

Remember when SVB disclosed that its held-to-maturity portfolio was underperforming and businesses scrambled to wire funds out of their accounts and everyone freaked out on Jason Calanacis about this tweet? Because yeah, me too.

In the 2 months that followed, regional banks saw an aggregate $17.9 billion in deposits flow out to large banks and B2B fintechs (Brex, Mercury...) amid fears that smaller institutions might not have the reserves to back customers' deposits in the event of a wider bank run. Mass withdrawals sparked concerns that other banks would shut down, accelerating a trend of consolidation that's been eroding competition in the banking industry for the past few decades.

One year on from the SVB crisis, where have these deposits landed?

Let's dive into the current state of bank deposits, financial institutions’ priorities going into a stable(r) interest rate environment, and how fintechs are helping banks compete going forward.

Deposits are in their small bank era

Customers fled from banks of all sizes in the immediate aftermath of SVB's collapse, with the bulk of withdrawals taking place at 30 mid-size banks ($50B to $250B in assets). Large banks and community banks were largely spared from bank runs, but by May, outflows started to trickle back– particularly to the largest institutions and smaller community bank. 

The 1-year net effect: As of last April 2023,