The events that unfolded over the last couple of days have been deeply concerning. The collapse of Silicon Valley Bank (SVB) created a tremendous amount of uncertainty and stress in many founders and employees. At Friday Finance, your financial security is our top priority.
We take specific action to avoid capital risk exposure for our clients. Here is how we keep your money secure:
Friday Finance works with well-established banks to keep your money secure
All funds in your Friday Finance business account are deposited with our partner bank, BNP Paribas, which is the second largest universal bank in Europe. Client funds sit securely on segregated accounts and your deposits are never used for lending purposes. Deposits are guaranteed by the European Deposit Guarantee Scheme Directive for up to €100,000 per client and they are always available for withdrawal.
To facilitate money movements from and to your bank accounts, we utilize our banking partner Swan – a regulated Electronic Money institution offering payment services approved by the ACPR.
Multi-banking gives you an extra layer of security
The most recent events shall serve as a wake up call. Business executives need to take specific action to persevere their treasury:
- Open more than one business bank account and split your money across multiple banks to de-risk your exposure to bank runs.
- Consider well-established banks with the highest long-term credit ratings assigned by rating agencies such as Fitch and Moody's.
- Friday Finance helps you spread your risk by allowing you to manage multiple accounts from one place. Learn more about our multi-banking here.
A plan to protect any excess cash is vital
If companies had used SVB for their core services but diversified their excess cash across multiple banks, the current situation would have been much less catastrophic. As a rule of thumb: If you hold more than €1M on your accounts, diversify your excess cash. You are already exceeding European deposit insurance ten times.
You may consider investing any significant cash balances in excess of immediate cash flow needs in money-market funds that give you an exposure to more secure government-backed securities.
Why our model will prevail
We’ve built Friday Finance with a partner bank business model because it allows us to focus on product innovation. The partner bank model has allowed us to innovate faster and focus on delivering an unparalleled product experience, while simultaneously putting security first and trusting in one of the 30 globally systemically important banks as partner for an additional layer of safety and security.