One major misconceptions in our industry is that Fintech accounts are less secure than traditional bank accounts. In this article, we provide some color to this myth with five simple facts that illustrate how we at Friday Finance ensure the highest security standards to our users.
1. Business accounts are protected by BNP Paribas
Friday Finance business accounts are safe with BNP Paribas. All funds in your Friday Finance business account are deposited with our partner bank which is the second largest universal bank in Europe and is considered one of the most secure banks in the world with an investment grade rating. BNP Paribas is also part of the systemically important financial institutions (SIFI) by the Financial Stability Board due to its size, interconnectedness, and potential impact on the global financial system in the event of its failure.
Banks that have the SIFI status are subject to enhanced regulatory scrutiny and requirements, such as higher capital and liquidity standards, stress testing, and recovery and resolution planning. In the event of a bank collapse, governments and regulators provide additional indirect guarantees to prevent a fallout from happening. All in all, we are sure we chose the best banking partner in Europe to keep the funds of your Friday Finance Business Account secure in the long run.
With your Friday Finance business account, you can manage your day-to-day business needs including making bill payments, issuing cards and streamlining your month-end close.
2. Funds are guaranteed in accordance to the European Deposit Scheme
Deposits are guaranteed by the European Deposit Guarantee Scheme Directive for up to €100,000 per client and they are always available for withdrawal. In the unlikely event of a bank failure of BNP Paribas your deposits of up to €100,000 will be guaranteed by the government.
3. Funds Cannot Be Used for Lending nor Investing
Here’s an explanation why our accounts are actually more secure than most banks. Our client funds sit securely on segregated accounts and they are never used for lending purposes. Contrary to the traditional banking business model of borrowing short and lending long, neither we – as a software company – nor BNP Paribas can lend the money deposited by our customers to other people.
This is what we do instead: We generate revenue from (1) subscriptions (2) interchange on our corporate cards and (3) we receive a revenue share of the interest rate on venture debt and other financial products that we offer alongside with our partners. We value transparency and we aim to align our interests with the ones of our customers to achieve shared success.
4. Focus on software and innovation
We’ve built Friday Finance with a partner bank business model because it allows us to focus on product innovation. The partner bank model (or custodian banking model) has allowed us to innovate faster and focus on delivering an unparalleled product experience, while simultaneously putting security into the hands of one of the 30 globally systemically important banks for an additional layer of safety and security. BNP Paribas is the custodian bank that holds and guarantees the funds for Friday Finance. Such a model offers the highest security and the best technology to our customers. It’s a win-win-win situation.
5. Better Risk Management from Diversifying Deposits Across Multiple Banks
Friday Finance helps you spread your risk by allowing you to manage multiple accounts from one place. Open more than one business bank account and split your money across multiple banks to de-risk your exposure to the default of any single bank. Friday Finance connects with more than 20,000 banks all across Europe and our finance management features extend to all your connected accounts.
