ModernFi Raises $18.7M Series A to Power Deposit Growth at Community and Regional Banks
- Successful Series A funding round of $18.7 million led by Canapi Ventures and participation from notable investors and leading banks.
- Total raised to date exceeds $23 million, indicating strong investor confidence in ModernFi's mission and platform.
- ModernFi's deposit network aims to help community and regional banks grow, retain, and manage their deposits in a fast-changing banking environment.
- The company's modern tools help attract and retain clients, drive growth, and increase balance sheet stability for banks of all sizes.
- Streamlined onboarding and operations for banks and clients, increasing the usability and reach of sweep and reciprocal products.
- None.
Insights
ModernFi's recent $18.7 million Series A funding round represents a strategic investment in the financial technology sector, particularly in the area of deposit management for community and regional banks. The involvement of high-profile venture capital firms like Canapi Ventures and Andreessen Horowitz, along with direct investment from established banks, underscores the perceived value and potential of ModernFi's platform. This infusion of capital is expected to bolster ModernFi's capabilities in providing innovative solutions to enhance deposit growth and retention, which is critical in an environment where banks face challenges from higher interest rates and increased competition.
The focus on tech-forward platforms to manage deposits reflects a broader trend in the banking industry towards digital transformation. ModernFi's API-first and cloud-native approach could provide a competitive edge by increasing efficiency and reducing operational burdens associated with traditional deposit networks. The investment could lead to a positive impact on the balance sheets of partner banks by attracting large-value depositors and improving liquidity management, which is essential given the current economic landscape and regulatory scrutiny.
ModernFi's positioning as the only tech-enabled deposit network in the country is significant in the context of the evolving banking landscape. Traditional banking institutions are increasingly competing with fintech firms and need to offer comparable digital services to retain clients. By streamlining onboarding and operations, ModernFi addresses a key pain point for banks and their clients, potentially improving customer satisfaction and loyalty. This could lead to increased market share for banks that leverage ModernFi's platform, as they can offer more attractive deposit management services to high-net-worth individuals and businesses seeking advanced financial solutions.
Furthermore, the advancement of technology in banking, such as real-time money movement and digital banking platforms, has altered customer expectations. ModernFi's solutions cater to these expectations by providing extended insurance and seamless integration into online banking. This not only enhances the user experience but also positions the partner banks as forward-thinking and customer-centric, which is crucial in attracting and retaining clients in a competitive market.
The investment in ModernFi comes at a time when the banking sector is navigating through a period of elevated interest rates and liquidity concerns. The platform's ability to attract and manage deposits effectively is particularly relevant as banks look for ways to shore up their funding amidst potential deposit outflows. ModernFi's technology could play a role in mitigating the impact of interest rate hikes on banks' cost of capital by helping them secure stable and low-cost deposit inflows.
Additionally, the increased regulatory focus on liquidity and funding underscores the importance of robust deposit management systems. By providing banks with better tools to manage their deposit bases, ModernFi could contribute to the overall financial stability of the banking system. This is especially pertinent given the recent extraordinary banking events that have highlighted the need for improved control over deposit management. In the long term, the success of ModernFi's platform could influence the regulatory approach towards liquidity management in the banking sector.
Led by Canapi Ventures, round accelerates mission to bring end-to-end deposit management to financial institutions of all sizes, helping them thrive in a fast-changing banking environment
Faced with higher interest rates and stress in the sector, banks have been seeking new, innovative options that can drive deposits. ModernFi helps banks thrive in an increasingly competitive banking landscape, and attract and retain clients that might otherwise go to the largest banking institutions or leave the banking sector entirely.
“Community and regional banks form the foundation of the American economy, providing an outsized amount of credit and banking services to critical industries and areas that might otherwise be overlooked,” said Paolo Bertolotti, CEO and Cofounder of ModernFi. “Faced with fundamental shifts in the behavior of deposits, institutions benefit from modern tools to manage and grow their funding. ModernFi has been privileged to help institutions of all sizes protect their deposit base, and the team looks forward to continuing its support of the sector.”
ModernFi operates a deposit network through which banks can grow, retain, and manage their deposit base by sweeping funds, sourcing deposits, and providing extended insurance to depositors through program banks. ModernFi’s solutions help banks attract and retain large-value depositors, driving growth and increasing balance sheet stability. Unlike alternatives, ModernFi streamlines onboarding and operations for banks and their clients, increasing the usability and reach of sweep and reciprocal products.
“The industry needs a next-generation solution for reciprocal deposits that is seamlessly integrated into online banking, built both API-first and cloud-native,” said Neil Underwood, Co-Founder and General Partner at Canapi. “ModernFi has built exactly that, at the exact right time and place. Canapi’s strong bank network and deep fintech experience will help accelerate significant deposit flows through the platform.”
Since its first raise, ModernFi has quickly established itself as the country’s only tech-enabled deposit network. While existing networks rely on manual processes that have limited the adoption and use of network products, ModernFi’s network is built on a modern tech stack to eliminate the friction for depositors and remove the operational burden for banks, unlocking the full potential of sweep and reciprocal products.
“Huntington is laser focused on delivering innovative products and services that meet the needs of our customers and colleagues,” said Igor Cerc, Chief Enterprise Strategy Officer for Huntington National Bank and Head of Huntington Ventures. “ModernFi's deposit network delivers critical features and capabilities around deposit management for the industry. ModernFi’s functionality should expand digital capabilities for the banking sector and offers a robust, modern service with the potential to further differentiate how our Wealth Management customers can manage their money.”
"We are thrilled to partner with ModernFi to bring a next-generation deposit network to market," said Tyler Craft, Director of Transformation - Fintech & Emerging Technology at First Horizon Bank. "Deposit management is a key priority for the banking sector right now. ModernFi's technology to streamline onboarding and operations for depositors and banks provides an innovative additional way for our industry to serve clients."
Faced with a rapidly evolving deposit landscape, banks across the country have turned to ModernFi to help manage their funding. Elevated interest rates and the advancement of technology including digital banking and real-time money movement have fundamentally changed the speed and stability of deposits. Coupled with increased regulatory scrutiny on liquidity and funding, the need for ModernFi’s software for deposit management has never been greater.
"At this critical time in the banking sector, we're thrilled to reaffirm our investment in ModernFi," said David Haber, General Partner at Andreessen Horowitz. "In the face of unprecedented deposit outflows and extraordinary banking events, ModernFi's deposit network delivers critical stability and control over deposit management. With their strategic position and track record, we're confident ModernFi will further catalyze growth and provide crucial support to American banks."
ModernFi was founded in 2022 by Paolo Bertolotti and Adam DeVita, who met as undergraduates at
About ModernFi
ModernFi empowers banks of all sizes to better serve their communities. Through ModernFi's deposit network, banks can grow, retain, and manage their deposit base by sourcing deposits, sweeping funds, and providing additional security to depositors. Founded by a team of veteran engineers and bankers, the firm provides banks with end-to-end deposit management built on a modern tech stack and a foundation of compliance. Learn more at modernfi.com.
About Canapi Ventures
Canapi Ventures is a venture capital firm investing in early to growth-stage fintech companies. Our partners have been at the forefront of financial services innovation as operators, investors, bankers, advisors, and regulators. Our venture capital model connects high-quality fintech companies to our extensive network of banks and strategic partners. Canapi Ventures is advised by CenterHarbor Advisors and Canapi Advisors, LLC, a wholly owned subsidiary of Live Oak Bancshares, Inc. (Nasdaq: LOB). For more information, visit canapi.com.
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Source: ModernFi
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