Erebor Owns Deposit Economics

Owning the bank turns deposits from a shared referral stream into Erebor’s core earnings engine. A neobank that rides on a sponsor bank usually passes customer cash to the partner bank, which invests or lends it and sends back only a slice of the spread. Erebor keeps the charter, the balance sheet, and the asset side in house, so the interest earned on customer balances lands directly in Erebor’s P&L and scales with every new large depositor.1 2 3

• Mercury described the sponsor bank model plainly in 2023. It gathered deposits, swept them to partner banks like Evolve, and received a revenue share, while the banks did the lending. That is the contrast. Erebor is not collecting a fee from someone else’s balance sheet, it is running its own.3
• This is why deposit economics matter more for Erebor than for a software only fintech. Erebor’s customer base is small but heavy, about 500 to 600 companies with roughly $7M average deposits, and interest income was 68% of Q2 revenue. More deposits directly mean more low cost funding to place into short duration bonds and loans.1
• The model also changes the dependency chain. In BaaS, sponsor bank relationships are a key selection factor and a source of operational risk because the fintech depends on another institution’s charter and economics. Erebor was built specifically to avoid that upstream dependence, similar to Column’s fully integrated bank model.1 2

The next step is a land grab for large, sticky operating balances from AI, defense, and crypto companies that want both credit and programmable banking from the same institution. If Erebor keeps adding deep deposit accounts, it compounds in two ways at once, through higher net interest income today and through more lending capacity and product control tomorrow.1 2