Fintech Starts a Deposits Marketplace to Serve Community Banks

Grounded Technologies, a financial-technology startup, is unveiling a marketplace for deposits, loans and Community Reinvestment Act credit, with support from Bank of Montreal, to help community banks manage their balance sheets.

(Bloomberg) — Grounded Technologies, a financial-technology startup, is unveiling a marketplace for deposits, loans and Community Reinvestment Act credit, with support from Bank of Montreal, to help community banks manage their balance sheets.

The marketplace will connect banks and credit unions that are looking to manage their assets and liabilities with deposit suppliers, such as large asset managers, according to the New York-based fintech. It’s working with US banks with $14 million to $2 trillion in assets, and partnering with Bank of Montreal, which will operate some of Grounded’s products, including payment rails, the companies said in a statement.

“We founded Grounded to provide financial institutions with the resources and tools to be efficient with their balance sheets, especially during more constrained periods,” co-founder and Chief Executive Officer Danae Vachata said in an interview. “Right now we are in an economic environment where community financial institutions need our help the most, and they need our help so they can help their respective communities.”

Small banks lost $109 billion in deposits in just one week in March as customers moved their deposits to large US firms. The funds were pulled amid tumult in the regional-banking sector that ultimately led to the collapse of lenders including Silicon Valley Bank and First Republic Bank. Bank deposits have largely stabilized as the turmoil has receded.

Grounded is gearing up to move $2 billion in assets across its platform and into financial institutions. It’s working with banks of various sizes, and has a waiting list of others seeking to join the platform, the company said. Bank of Montreal, Grounded’s custodial partner, will help it move the assets while Grounded works as “an air-traffic control person, utilizing the data and making sure that everything moves correctly and into the right place,” Vachata said.

The technology needed to enable such money movement, record keeping and custody of assets didn’t previously exist in the space, according to Andrew Harrison, head of US digital partners at Bank of Montreal. “We’re helping Grounded build products that support this new tech-enabled way to move deposits and assets in a very automated digital-first capability,” he said in an interview.

Bank of Montreal, along with Susquehanna Private Equity Investments and others, also invested in Grounded, raising $3.5 million in new funding for the fintech, according to the statement.

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