America’s ecosystem of over 4,500 banks is an anomaly in the global landscape. Other countries’ banking numbers barely reach 500. However, banking has been going through a shift, and in 2023, the threat to smaller banks is increasing.
…[A]ccording to Treasury Prime, an embedded banking platform that connects banks and fintechs, “Finding a single bank that perfectly aligns with the requirements of a growing business can be challenging…Engaging with multiple banks grants organizations the freedom to choose from diverse options that best suit their evolving needs.”
The need to partner with multiple banks may have also been compounded by the March banking crisis. Employing diversification through partnering with numerous banks covers fintechs for possible disruption in banks’ service.
“It’s extremely important to create bank redundancies to avoid any potential outages that could impact your business operations,” said Treasury Prime CEO Chris Dean. The company explained that while none of Silicon Valley Bank’s client deposits were lost, the bank’s failure had significantly disrupted the operations of fintechs that used them.