ClearBank Says Inflows Jumped 20% During SVB Crisis

Silicon Valley Bank’s loss is apparently U.K. embedded banking firm ClearBank’s gain.

The company’s CEO said customer flows into its platform rose by 20% during the week SVB collapsed, Bloomberg reported Monday (March 27).

“We’ve had a lot of inflow that’s driven that surplus cash in terms of flight to quality,” Charles McManus said, per the report.

He said business has since stabilized, with the company’s balances at the Bank of England climbing to 3.7 billion pounds (about $4.5 billion) from about 3 billion pounds (about $3.7 billion) at the end of 2022.

ClearBank is one of several financial institutions that saw strong inflows following the downfall of SVB, one of the largest banking failures in U.S. history.

For example, brokerage firm Charles Schwab announced earlier this month that customers deposited $16.5 billion between March 10 and March 16.

That time frame coincides with the collapses of Silicon Valley Bank on March 10 and Signature Bank two days later, as well as the days of worry in the financial sector that those failures could infect the broader financial system.

That week also saw an uptick in deposits at some of the largest banks in the U.S., including J.P. Morgan Chase, Citigroup, Bank of America and Wells Fargo.

“The top six banks in the U.S. are and have been too big to fail, the financial crisis over 10 years ago demonstrated that,” Michael Imerman, an assistant professor at the University of California Irvine’s business school, told Bloomberg in a March 14 interview. “So, it’s safer to go with a name with a higher degree of certainty.”

It wasn’t just established players like Citigroup and Charles Schwab seeing increased deposits. For example, financial services company Brex reportedly saw billions of deposits as SVB was undergoing its crisis.

But as PYMNTS has noted, the same concerns that have shadowed the banking sector in recent weeks will eventually come to haunt digital players, particularly if they are getting new accounts that exceed the $250,000 limit in place on insured deposits.

“The question of what to do with deposits over $250,000 — especially when it comes to business banking — will gain more urgency,” PYMNTS wrote.

In an interview with PYMNTS’ Karen Webster, Amias Gerety, partner at FinTech VC firm QED Investors, said one regulatory strategy would be to charge for deposit insurance, possibly on a risk-adjusted framework — a function is already in place at the Federal Deposit Insurance Corporation (FDIC).