Mercury's software-led banking model
Immad Akhund, CEO of Mercury, on the business models of fintechs vs. banks
The key difference is that Mercury sells a startup banking interface and distribution engine, while SVB was a balance sheet business taking duration and credit risk. Mercury earns money by routing deposits to partner banks, taking a share of deposit economics, collecting card interchange, wire and FX fees, and a slice of venture debt economics, without having to make the core asset allocation decisions that hurt SVB when excess deposits were pushed into long duration securities.
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SVB was built around borrowing short and lending long. It gathered startup deposits, then had to find ways to earn yield on them. Mercury was built as a software layer on top of sponsor banks, so it could focus on onboarding, payments, cards, and treasury workflows while leaving loan book and securities portfolio management to partner banks.
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That is what sits behind the idea of being more tolerant. Sponsor banks that work with fintechs can earn meaningful non interest income from payments, program management, and fintech partnerships, so they are less dependent on stretching for yield through loans or long dated securities than a classic commercial bank like SVB.
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Mercury is still exposed to rates, but differently. Its biggest revenue stream is revenue share on deposits, which surged as rates rose, and later research estimates roughly 90% of Mercury revenue came from deposit economics versus about 10% from interchange. That is a robust software and distribution model, but not a pure SaaS model like Ramp.
Going forward, the winning startup finance platforms will look less like single product neobanks and more like software led financial hubs. Mercury’s path is to keep bundling banking, cards, treasury, and lending around the startup workflow, while avoiding the concentrated asset liability mismatch that defined SVB’s failure mode.