How to Diversify Your Portfolio With Business Loan Marketplace

By | Blog

Diversifying your investment portfolio is a prudent strategy to manage risk and potentially increase returns. One way to achieve diversification is by including investments from different asset classes, such as stocks, bonds, real estate, and even business loans. In this case, utilizing a business loan marketplace can be a viable option.

This blog will discuss the business loan marketplace and how it can diversify your portfolio.

What Is Business Loan Marketplace

A business loan marketplace is an online platform that connects borrowers, typically small businesses or startups, with lenders interested in financing these businesses. The marketplace acts as an intermediary, facilitating the borrowing process by matching borrowers with potential lenders.

In a business loan marketplace, borrowers can submit applications, providing information about their business, financials, and funding needs. On the other hand, loan lenders can review these loan applications and choose to invest in loans that align with their investment criteria.

The key features and benefits of a business loan marketplace include:

  1. Access to capital: Business loan marketplaces provide an alternative funding source for businesses that may not qualify for traditional bank loans or prefer a streamlined online borrowing experience.

  2. Diverse range of lenders: These marketplaces attract various lenders, including individual investors, institutional investors, and alternative lenders. This allows borrowers to access a broader pool of potential lenders, increasing their chances of securing financing.

  3. Competitive interest rates: The presence of multiple lenders within the marketplace creates competition, which can lead to competitive interest rates for borrowers. Lenders may compete to offer lower rates and attractive terms to win borrowers’ loan requests.

  4. Streamlined application process: Borrowers can typically complete the loan application process online, saving time and effort compared to traditional lending methods. The marketplace may use technology and algorithms to automate the application review and approval process, providing faster decisions.

  5. Risk assessment and credit scoring: Business loan marketplaces often employ risk assessment tools and credit scoring models to evaluate borrower creditworthiness. This helps lenders make informed investment decisions based on business financials, credit history, industry performance, and other relevant data.

  6. Loan diversification for investors: Business loan marketplaces also attract investors looking to diversify their investment portfolios. Lenders can spread their risk across various businesses and industries by investing in loans from multiple borrowers.

  7. Loan servicing and administration: The marketplace typically handles loan servicing and administration tasks, including collecting borrower payments, managing loan documentation, and providing ongoing support to both borrowers and lenders.

  8. Secondary market liquidity: Some business loan marketplaces offer secondary markets where investors can buy and sell existing loans. This provides liquidity and flexibility for investors wanting to exit their loan positions before maturity.

Ways to Diversify Investment Business Financing Portfolio

Diversifying your investment portfolio is a prudent strategy to manage risk and potentially increase returns. One way to achieve diversification is by including investments from different asset classes, such as stocks, bonds, real estate, and even business loans. In this case, utilizing a business loan marketplace can be a viable option. Here’s how you can diversify your portfolio with a business loan marketplace:

  1. Understand the concept: A business loan marketplace connects borrowers, typically small businesses or startups, with individual or institutional lenders. As an investor, you can participate by providing funds to these borrowers through loans.

  2. Research reputable marketplaces: Start by researching and identifying reputable business loan marketplaces. Look for platforms that have a track record of successful loan originations, transparent processes, and strong risk management practices.

  3. Assess your risk tolerance: Before diving into any investment, it’s crucial to assess your risk tolerance. Investing in business loans involves a certain level of risk, as there’s always a possibility of default by borrowers. Understand the potential risks and rewards associated with this asset class and evaluate whether it aligns with your risk appetite.

  4. Determine your investment amount: Decide how much capital you will allocate to business loans within your overall investment portfolio. It’s advisable to start with a smaller portion initially and gradually increase your exposure as you gain more experience and confidence in the marketplace.

  5. Conduct due diligence: After selecting a business loan marketplace, thoroughly review their loan offerings and underwriting process. Evaluate the marketplace’s loan selection criteria, borrower creditworthiness assessment, and default recovery procedures. Look for platforms that provide comprehensive borrower information, such as financials, business plans, and credit scores.

  6. Diversify across loans: Spread your investments across multiple loans to reduce the risk of any single loan default impacting your entire portfolio. Most business loan marketplaces allow you to invest smaller amounts in individual loans, enabling you to diversify effectively. Consider investing in loans from different industries, geographic regions, and risk grades to diversify your exposure further.

  7. Monitor your investments: Regularly monitor the performance of your loan investments. Keep track of loan repayments, default rates, and any changes in borrower creditworthiness. Stay informed about updates and notifications from the marketplace regarding your investments.

  8. Reinvest and manage your portfolio: As loans are repaid, consider reinvesting the principal and interest into new loans to maintain your exposure. Continuously assess your portfolio’s performance and make adjustments if needed. Rebalancing your investments periodically can help optimize your risk and return profile.

  9. Seek professional advice: If you’re unsure about navigating the business loan marketplace, consider seeking advice from a financial advisor or investment professional. They can provide personalized guidance based on your circumstances, goals, and risk tolerance.

Remember, investing in business loans through a marketplace carries inherent risks, including the potential loss of principal if borrowers default. Thorough research, due diligence, and diversification are essential to mitigate these risks and maximize your chances of success.

How to Select Business Loan Management 

Selecting the right business loan management system is crucial for efficiently managing your loan portfolio, streamlining processes, and ensuring effective risk management.

Functionality and Features

Assess the features and functionalities offered by the loan management system. It should provide capabilities for loan origination, underwriting, documentation management, payment processing, collections, and reporting. Look for features aligning with your business needs and loan portfolio requirements.

Scalability and Customization

Consider the scalability of the system and its ability to accommodate your growing loan portfolio. Determine if the system allows customization and configuration to adapt to your unique lending practices and workflows. A flexible system will enable you to tailor it to your business requirements and integrate with other existing software.

User Experience and Ease of Use

A user-friendly interface and intuitive navigation are essential for efficient loan management. Evaluate the user experience of the system by requesting demos or trial access. It should be easy to learn and use, reducing the learning curve for your team and minimizing the chances of errors or delays.

Integration and Compatibility

Determine if the loan management system can integrate with your existing software ecosystem. Seamless integration with accounting systems, customer relationship management (CRM) platforms, and other third-party tools can streamline data flow, eliminate manual data entry, and improve operational efficiency.

Compliance and Risk Management

Regulatory compliance is crucial in the lending industry. Ensure that the loan management system adheres to applicable regulations and provides compliance monitoring, document management, and risk assessment features. Look for features such as credit scoring, collateral management, and automated alerts for early identification of potential default risks.

Reporting and Analytics

Reporting and analytics capabilities are essential for tracking loan performance, monitoring key metrics, and generating insights. The system should offer comprehensive reporting features, customizable dashboards, and robust analytics tools to support informed decision-making and portfolio management.

Security and Data Protection

Loan management systems handle sensitive customer and financial data, so security is paramount. Evaluate the system’s security measures, including data encryption, access controls, regular backups, and disaster recovery procedures. Additionally, ensure that the system complies with data protection regulations, such as GDPR or CCPA, depending on your jurisdiction.

Support and Training

Consider the level of customer support provided by the vendor. Assess the availability of training resources, documentation, and user forums. A responsive support team can address any issues or questions that arise during the implementation and ongoing use of the system.

Cost and ROI

Evaluate the cost of the loan management system, including licensing fees, implementation costs, and ongoing maintenance expenses. Consider the potential return on investment (ROI) the system can deliver in terms of increased efficiency, reduced operational costs, and improved risk management.

Vendor Reputation and Stability

Research the vendor’s reputation, experience in the industry, and track record of successful implementations. Read customer reviews, seek recommendations from industry peers, and evaluate the vendor’s financial stability to ensure a reliable and long-term partnership.

Considering these factors will help you select a business loan management system that aligns with your specific needs, improves operational efficiency, and supports effective loan portfolio management. It’s advisable to involve key stakeholders, including operations, IT, and risk management teams, in the evaluation process to ensure comprehensive decision-making. 

Discover how BankLabs can help your bank harness the power of the best tools and technologies to transform your operations. Contact us today to schedule a consultation and learn more about our industry-leading solutions tailored to your needs. Unleash your bank’s potential with BankLabs and stay ahead in the digital banking era.

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Why You Need Participation Loan Program Software Management

By | Blog

In today’s dynamic lending landscape, participation loan programs have gained significant traction as a means of spreading risk and maximizing returns. These programs involve multiple lenders pooling their funds to finance a single loan, offering borrowers increased access to capital while providing lenders with diversified investment opportunities. However, managing participation loan programs can be complex, demanding meticulous coordination, efficient communication, and robust risk management practices.

This is where participation loan program software management becomes indispensable. By harnessing the power of advanced software solutions, financial institutions, and organizations can streamline their loan origination processes, investor management, risk assessment, compliance, and reporting. Using purpose-built software facilitates a holistic approach to managing participation loan programs, empowering lenders to optimize efficiency, reduce errors, and mitigate risks.

In this article, we delve into the key reasons why participation loan program software management has become an essential tool for financial institutions seeking to navigate the intricacies of these programs effectively. We explore how software solutions combine disparate elements of loan origination, investor management, risk assessment, compliance, and reporting, providing a cohesive platform for seamless collaboration and data-driven decision-making.

Participation Loan Software Streamlines Loan Origination 

Loan origination is a critical phase in participation loan programs, involving the complex coordination of multiple lenders and borrowers in a single loan. The process can be challenging, time-consuming, and prone to errors if not managed effectively. However, implementing participation loan program software management can overcome these challenges, and loan origination can be streamlined for improved efficiency and accuracy.

Participation loan program software enables automated data capture, eliminating the need to enter borrower information manually. The software integrates with external sources such as credit bureaus and financial data providers, allowing loan officers to access comprehensive borrower profiles. This streamlines the information-gathering process and facilitates more accurate credit checks. With real-time data availability, loan officers can make informed decisions regarding borrower creditworthiness and eligibility.

The benefits of streamlining loan origination through participation loan program software management are substantial. It reduces manual effort, minimizes errors, enhances efficiency, and accelerates the loan origination timeline. As a result, financial institutions can offer borrowers a seamless and transparent experience while effectively managing the complex dynamics of participation loan programs.

Effective Investor Management

Managing multiple investors is a critical aspect of participation in loan programs. Effective investor management ensures smooth collaboration, accurate allocation of loan shares, and transparent communication regarding investment commitments and returns. Participation loan program software management provides powerful tools and features to streamline investor management.

Consolidated Investor Relationship Management

  • Centralized Platform: Participation loan program software offers a centralized platform to manage investor relationships. This platform allows loan officers and program managers to access comprehensive investor profiles, including contact information, investment preferences, and historical data.
  • Investor Database: The software enables the creation and maintenance of an investor database, storing relevant information and facilitating efficient retrieval when needed.
  • Investor Communication: Built-in features allow direct and secure communication between loan officers and investors, ensuring smooth information exchange, updates, and clarifications.

Allocation of Loan Shares and Investment Commitments

  • Accurate Share Allocation: Participation loan program software automates the allocation of loan shares among participating lenders based on predetermined rules or agreed-upon terms. This ensures the accurate distribution of risk and returns.
  • Investment Commitment Tracking: The software tracks investment commitments made by individual investors, providing real-time visibility into the amount invested and remaining commitment. This helps maintain transparency and ensures compliance with investment agreements.

Robust Risk Assessment and Monitoring

In participation in loan programs, robust risk assessment and monitoring are crucial to ensure the overall health and performance of the loan portfolio. Effective risk management practices help identify potential risks, mitigate them proactively, and safeguard the interests of lenders and borrowers. Participation loan program software management provides powerful tools and functionalities for comprehensive risk assessment and monitoring.

Creditworthiness Evaluation

  1. Automated Credit Analysis: Participation loan program software utilizes automated algorithms and risk models to evaluate the creditworthiness of borrowers. It analyzes financial data, credit history, and other relevant factors to assess the borrower’s ability to repay the loan.
  2. Real-time Credit Monitoring: The software provides real-time monitoring of borrower credit profiles. It alerts loan officers to any changes in credit ratings, ensuring prompt action in case of deteriorating creditworthiness.

Portfolio Risk Management

  • Risk Rating Models: Participation loan program software incorporates risk rating models that assign risk scores to loans based on various factors, such as credit quality, collateral, and industry risk. This helps prioritize risk mitigation efforts and allocate resources effectively.
  • Diversification Analysis: The software enables analysis of loan portfolio diversification to identify concentration risks and ensure a balanced distribution of loans across industries, regions, and borrower types.
  • Scenario Analysis: Sophisticated software tools provide scenario analysis capabilities, allowing loan officers to assess the impact of different economic and market scenarios on the loan portfolio’s performance. This helps in stress testing and developing risk mitigation strategies.
  • Ensuring Compliance and Regulatory Requirements

Compliance with regulatory standards is a fundamental aspect of participation in loan programs. Financial institutions and organizations must adhere to various legal and regulatory requirements to ensure transparency, protect against fraud, and maintain the integrity of the loan program. Participation loan program software management is crucial in helping institutions meet these compliance obligations effectively.

Regulatory Compliance Checks

  • Anti-Money Laundering (AML) Regulations: Participation loan program software incorporates AML compliance checks by integrating with identity verification systems and databases. It verifies the identity of borrowers and investors, performs sanctions screening, and flags suspicious activities.
  • Know Your Customer (KYC) Procedures: The software facilitates KYC procedures by capturing and verifying essential customer information, including identification documents and proof of address. It ensures compliance with KYC regulations and helps verify investors’ accreditation status.

Document Management and Storage

  • Documentation Compliance: Participation loan program software enables institutions to maintain compliance by generating and storing the necessary loan documents, agreements, and disclosures. It ensures that all required documentation is accurate, complete, and accessible when needed.
  • Data Privacy and Security: The software incorporates robust data privacy and security measures to protect sensitive borrower and investor information. It adheres to data protection regulations, implements encryption protocols, and establishes access controls to ensure confidentiality and compliance with privacy laws.

Reporting and Audit Trail

  • Regulatory Reporting: Participation loan program software generates comprehensive reports required for regulatory compliance. These reports include loan portfolio data, investor information, risk metrics, and financial performance indicators.
  • Audit Trail: The software maintains an audit trail that records all activities and changes within the system. This audit trail provides a transparent record of actions taken, ensuring accountability and facilitating compliance audits.

Searching For the Right Participation Loan Program Software? Call BankLabs Today!

In the complex landscape of participation loan programs, efficient software management is vital to streamline loan origination, investor management, risk assessment, and compliance. Adopting participation loan program software management brings numerous benefits, including enhanced operational efficiency, improved investor relationships, comprehensive risk assessment and monitoring, streamlined compliance, and robust reporting capabilities.

When choosing a reliable and effective software solution for participation loan program management, BankLabs stands out as a trusted and innovative partner. BankLabs brings extensive expertise in developing software solutions tailored to participation loan programs. With years of experience in the financial industry, they understand the unique challenges and requirements of managing such programs. 

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BankLabs’ Loan Participation Platform Secures Investment from FINTOP Capital & JAM FINTOP Banktech, and Launches New Spin-Out Company ‘Participate’

By | Insights, Press Release

BankLabs’ Loan Participation Platform Secures Investment from FINTOP Capital & JAM FINTOP Banktech, and Launches New Spin-Out Company ‘Participate’

Little Rock, July 26, 2023 — BankLabs, an innovation lab for banking technology, announces its strategic spin-out and significant investment from FINTOP Capital & JAM FINTOP Banktech, the preeminent FinTech venture capital firms led by fintech and banking veterans and supported by America’s leading banks. This partnership endorses BankLabs’ mission to democratize loan trading for all financial institutions, irrespective of size.

Participate is built to reduce friction in the loan participation process through cloud-native technology and curated buy-side clubs. This transformational platform is rapidly expanding, already patented, and promises to change the dynamics of the banking landscape forever. Participate automates the process of selling a portion of a new or existing loan. Once a loan is closed, Participate automates the back-office workflow including principal and interest splitting, collaboration on balances, notifications to the buy-side, variable interest rate management, secure document management and much more.

“We are delighted to partner with FINTOP & JAM FINTOP,” said Matt Johnner, President of BankLabs and Participate. “This is more than an investment, it is the creation of a new organization focused on helping America’s lenders improve and manage liquidity, reduce concentration risk and boost net income. JAM FINTOP’s involvement goes well beyond financial resources; they are essentially an R&D unit for the approximately 100 banks in their network. The FINTOP Capital team also brings impressive relationships beyond traditional banks as well. The infusion of their resources and strategic insights will vault Participate to new heights.”

Mike Montgomery, CEO of BankLabs and Participate shared, “we intend to create an environment where increasing the amount of participation loans creates a form of ‘backup liquidity’ that strengthens a bank’s ability to make necessary or strategic balance sheet adjustments more quickly and efficiently.”

“We see first-hand the struggles of community banks to balance liquidity and easily manage their loan portfolios, and the timing could not be better for a tool like Participate,” adds John Philpott, Partner at FINTOP Capital. It is a privilege to be able to work with professionals like Mike, Matt, and the entire BankLabs Participate team, and we are grateful to be partnering with them.”

For more information, please visit

About BankLabs

BankLabs is an innovation lab committed to redefining banking products for the future to help community oriented financial institutions succeed. With its groundbreaking Participate platform, BankLabs is at the forefront of transforming the loan trading process, reducing friction, and democratizing loan trading for financial institutions of all sizes. The spin-out of Participate follows the successful creation, growth and sale of Construct to Abrigo, a leading financial technology company with over 2,400 financial institutions as clients. Construct is the #1 construction loan automation and payments product in the country. Follow BankLabs for more innovations to come.

About FINTOP Capital FINTOP Capital is a venture capital firm focused on early-stage FinTech companies. With over $700 million in committed capital across five funds, FINTOP brings decades of FinTech founding and operating experience to the boardroom, partnering with innovative entrepreneurs to push the frontiers of the financial services sector. For more information, visit


JAM FINTOP is a joint venture between JAM Special Opportunity Ventures and FINTOP Capital. The partnership brings together bank experts and seasoned fintech entrepreneurs to invest in companies changing the way financial institutions and their customers move, track, and interact with money. For more information, visit

Participate Contact

Matt Johnner, President Participate & BankLabs



Brittani Roberts, Principal FINTOP Capital


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Streamline Your Process With a Loan Administration Software

By | Blog

If you are already tired of manually processing loan applications and payments as well as having a hard time managing your loan portfolio then you’ll need a loan administration software that can streamline everything. Using this software ensures that you can have enhanced efficiency. 

In this blog, we’re going to explore the benefits, features, and how to pick the most appropriate load administration system for your financial institution. We will also provide you with valuable insights on how you can use it effectively in improving customer experience.


What is Loan Administration Software?

It is a platform that helps lenders in streamlining and automating the entire loan life cycle that includes loan servicing, customer monitoring, syndication, customer care, and reporting. Having this system helps financial institutions have the opportunity to have a centralized data storage unit essential for managing and retaining customer information, keeping financial statement records, and creating new loan applications.

A loan management administration software provides a comprehensive bird’s eye view of all the lending life-cycle processes. This platform generally has built-in analytic modules which can be used to provide helpful insights and analysis by automating the loan cycle. It also helps to generate comprehensive loan reports regarding cash flow.  This valuable tool is primarily used by mortgage lenders, credit unions, and financial institutions that are designed to streamline everything which is a great option to traditional paper-based means of processing loans. Loan management software is usually hosted on the cloud or on-premise and can be customized according ti the needs of the organization.


Benefits of Loan Administration Software 

Automating Loan Processing 

One of the premier benefits of using this software is the opportunity to automate the process. Using this tool can automate varied loan processing jobs such as credit checks, document preparation, input of loan applications, underwriting, and loan disbursement. With automating the aforementioned tasks, it can simply reduce the processing time, increase accuracy and minimize errors. For instance, the requirements for such loans as electronic forms, checking credit or financial history, manage and capturing the borrower’s information can be done in just a few minutes.

Reducing Errors and Increased Accuracy 

Using loan management software is the perfect solution to minimize errors. As you see, manual processing of loan applications could lead to errors such as miscalculations, missing documents, incorrect data entry, and other issues that could result in delays or financial losses. 

Using reliable bank management software, it is very useful by automating the task with the aid of the proper tools for validation and verification of data. The best aspect of this software is it can let the user know if they have typed incorrect information. 

Enhanced Customer Service

As a borrower, of course, you want your loan to get approved right away. With the loan servicing platform on hand, it can improve the convenience and speed of loan processing, which can provide an improved customer experience.  As you can see, a better experience could lead to building customer satisfaction and loyalty, which is an easy way to attract new customers. It’s like hitting two birds using one stone. It’s an incredible opportunity for you to tap the additional perks of this incredible software.

Improving Data Security and Compliance

Loan administration software can help institutions to achieve these goals by implementing robust security features and compliance management tools. The software can provide role-based access controls, data encryption, and user authentication to prevent unauthorized access to loan data. It can also facilitate compliance with regulations by automatically generating reports, tracking compliance deadlines, and alerting users to potential violations.

Saving Time and Increasing productivity

Saving time and increasing productivity is another significant benefit of bank software. This can automate many time-consuming tasks, such as data entry, document processing, and payment handling, freeing up staff time to focus on more complex and higher-value tasks.

It can also provide reporting and analytics features that can help institutions to identify areas for process improvement and optimize loan processing workflows. By leveraging data insights, institutions can continuously improve their loan processing operations, reduce costs, and enhance customer satisfaction.

24/7 Availability

With the advent of technology, everything is possible. One of the advantages of using this loan servicing software is for the freedom to have access to it no matter what time or place you need it as long as you have an internet connection. Compared to the traditional loan management system, you still need to visit the physical office just to check the files. This can be a hassle, especially for busy individuals. 

How to Pick The Right Loan Servicing Software

Selecting the right loan management software can be a daunting task, but there are several key factors to consider that can help you make the right choice that will tell you that you have made a good investment for your lending business.

Here are some steps you can follow to pick the right loan servicing software:

  1. Identify your needs – You need to determine what specific features and functions you need from loan software. Consider factors such as payment options, loan types, reporting, security, and customer communication. This means that you have to review your goals to guarantee that you can get the most specific application for your individual needs.

  2. Research available options – Make sure to research the different loan software available in the market. Look for software that matches your needs and has a good reputation in the industry. Considering 2-3 software is an ideal way for you to check each one of them and sift them out and get the best one.

  3. Compatibility – Check if the software is compatible with your existing workflows and systems. Consider the ease of integration with other software you may be using, such as accounting or customer relationship management software. Having a system that is compatible with your existing software helps time and effort.

  4. Evaluate ease of use – Consider the user interface and ease of use of the software. Look for software that has a user-friendly interface and is easy to navigate. It’s useless to invest in software that is not easy to use. Find a version that can provide appropriate for your financial services.

  5. Consider customer support – It is best to look for software that offers reliable customer support. You have to check if the software vendor offers training and support to help you make the most of the software. This guarantees that your financial services can be streamlined.

  6. Evaluate pricing -Consider the cost of the software and the value it offers. You need to look for software that provides a good balance of features, functionality, and cost.

  7. Read reviews and ratings: Check online reviews and ratings of the loan servicing software you are considering. Look for feedback from other users to get an idea of the software’s strengths and weaknesses.

By following these steps, you can choose the right loan servicing software that meets your specific needs and helps you manage your loans efficiently.

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Important Things to Consider When Selecting Banking Software for Small Banks

By | Blog

Small banks require innovative and secure banking software that can help them succeed in the ever-evolving financial market. Whether you are a start-up, or an established small bank, your choice of banking software for small banks is likely to be one of the most important decisions you will make. Banking software not only helps with day-to-day operations but also provides efficiency, accuracy, and security for customers.

In this blog post, we’ll explore some of the essential features to consider when choosing one. From enhanced compliance reporting capabilities to advanced fraud prevention strategies, there is something here for every budget and organizational need!

Keep on reading!

Why Should I Get Banking Software?

Banking software has become an integral part of the financial industry. With the rise of digital transactions, it has become increasingly important for banks to have reliable, efficient, and secure software to manage their operations. It plays a crucial role in activities such as account management, loan processing, payments, and transaction monitoring.

It also provides customers with convenient and easy access to their accounts, through mobile apps or online banking portals. Moreover, by automating routine tasks, banking software frees up human resources to focus on more complex and value-added activities. In short, banking software is essential for banks and financial institutions to remain competitive in today’s digital age.

Is It Mobile Friendly?

The mobility of banking software is especially crucial for small banks that cater to customers in remote areas. With the advent of mobile banking, customers no longer need to visit bank branches to carry out transactions. However, the success of mobile banking depends on the mobility of the banking software.

Small banks need to invest in software that is easy to use, and navigate and is compatible with mobile devices. This will not only help them cater to their customers better but also aid in the growth and expansion of their business. As more and more consumers are going mobile, having software that is accessible on mobile is very useful.

Reliability and Speed? 

In today’s fast-paced digital age, it is imperative that small banks have speedy and reliable banking software. Customers expect nothing less than convenience, accessibility, and efficiency. Gone are the days of long queues and manual transactions.

The banking industry has evolved drastically with many innovations in the form of banking software that is available to small banks. However, slow and unreliable software can lead to unnecessary delays, and loss of trust by the customers, and could negatively impact the bank’s reputation. Therefore, it is critical for small banks to ensure that their banking software is dependable enough to keep up with the fast pace of banking transactions.

Is It Secured?

Ensuring the security of a small bank’s data has become increasingly important in this digital age. With hackers and cybercriminals constantly seeking ways to infiltrate systems and steal sensitive information, it is crucial for small banks to utilize banking software that prioritizes security features.

These features can include encryption, authentication protocols, and access control measures. By investing in secure software, small banks can not only protect their customers’ data but also foster trust and credibility within their community. Security should be a top consideration when choosing banking software for small banks, as it can greatly impact the overall success and reputation of the institution.

Is The Business Banking Software Flexible?

When it comes to banking software for small banks, flexibility is an important consideration. With the constantly changing landscape of the banking industry, software that can adapt to new regulations and market trends is crucial. Small banks also need software that can be customized to fit their unique needs and operations.

Flexibility not only allows for better efficiency and productivity, but also provides a competitive edge. Choosing banking software that offers flexibility gives small banks the ability to stay ahead of the game and stay relevant in a highly competitive market.

Does The Banking Platform Offer 24/7 Support?

Effective support can make all the difference when it comes to troubleshooting issues or implementing new features. A lack of support can lead to delays or even a complete shutdown of critical services, which can be disastrous for a small bank. That’s why it’s important to choose a banking software provider that offers robust support, whether it’s through a dedicated support team or an online portal with helpful resources. By ensuring that your provider offers solid support, you can have confidence in your software and focus on serving your customers with the best possible banking experience.

How to Select the Right Vendor For Banking Software Small Banks 

Choosing the best vendor for bank software for small banks can be a critical decision as it directly impacts the bank’s operations and customer service.

Here are some qualities when choosing the best vendor for bank software for small banks:

  1. Scalability – The vendor should offer banking software for small banks that can scale as the bank grows. The software should be capable of handling a growing customer base and an increasing number of transactions.

  2. Security – The software should be highly secure to protect sensitive customer information, financial data, and other critical information. The vendor should have a robust security system in place to safeguard against cyber threats.

  3. Functionality – The software should be feature-rich and capable of performing all the necessary banking functions. The vendor should provide a customizable solution that meets the bank’s specific requirements.

  4. User-Friendliness – The software should be user-friendly and easy to use for both bank employees and customers. The vendor should offer training and support to ensure that the software is used effectively. They should offer a demo or free trial on how to access the software.

  5. Cost – The vendor should offer a cost-effective solution that fits the budget of small banks. The vendor should be transparent about their pricing and provide a detailed breakdown of the costs involved. Don’t forget to compare prices when searching for local bank software.

  6. Integration – The software should integrate easily with other systems used by the bank, such as accounting software, payment gateways, and customer relationship management software.

  7. Support – The vendor should provide excellent customer support for banking solutions and be available to help the bank with any issues that arise. The vendor should have a responsive support team that can be reached quickly through multiple channels.

By considering these factors, small banks can choose the best vendor for bank software that meets their specific needs and requirements. It’s essential to research and compares multiple vendors and software solutions before making a final decision. This can give you enough time to decide which software works best for your banking business.

Looking For Bank Software For Small Institutions? BankLabs Is Here!

In conclusion, choosing the right software vendor is crucial for the success of small banks. With the right software, banks can streamline their operations, provide better customer service, and drive growth for their business. Factors such as scalability, security, functionality, user-friendliness, cost, integration, and support should be considered when selecting the best vendor for bank software for small banks.

Looking for the best software for your small bank? Look no further than BankLabs! Our software is designed specifically for small banks like yours, offering scalability, security, and robust functionality, all at an affordable cost.

Ready to take your bank to the next level? Contact us today to learn more about how BankLabs can help streamline your operations, improve your customer experience, and drive growth for your business. Don’t wait – start optimizing your banking software today

Matt Johnner

Banklabs President & Co-founder Matt Johnner accepted into Forbes Finance Council

By | Insights, Press Release

Forbes Finance Council is an Invitation-Only Community for Executives in Accounting, Financial Planning, Wealth and Asset Management, and Investment Firms

April 19, 2023 —Matt Johnner, the President & Co-founder of BankLabs, a provider of innovative banking technology solutions, has been accepted into Forbes Finance Council, an invitation-only community for executives in accounting, financial planning, wealth and asset management, and investment firms.


Matt Johnner

Matt Johnner was vetted and selected by a review committee based on the depth and diversity of His experience. Criteria for acceptance include a track record of successfully impacting business growth metrics, as well as personal and professional achievements and honors. 


“We are honored to welcome Matt Johnner into the community,” said Scott Gerber, founder of Forbes Councils, the collective that includes Forbes Finance Council. “Our mission with Forbes Councils is to bring together proven leaders from every industry, creating a curated, social capital-driven network that helps every member grow professionally and make an even greater impact on the business world.”


As an accepted member of the Council, Matt has access to a variety of exclusive opportunities designed to help him reach peak professional influence. He will connect and collaborate with other respected local leaders in a private forum. Matt will also be invited to work with a professional editorial team to share his expert insights in original business articles on, and to contribute to published Q&A panels alongside other experts. 


Finally, Matt will benefit from exclusive access to vetted business service partners, membership-branded marketing collateral, and the high-touch support of the Forbes Councils member concierge team. 



Forbes Councils is a collective of invitation-only communities created in partnership with Forbes and the expert community builders who founded Young Entrepreneur Council (YEC). In Forbes Councils, exceptional business owners and leaders come together with the people and resources that can help them thrive.


For more information about Forbes Finance Council, visit To learn more about Forbes Councils, visit

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The Benefits of Banking Automation Software for Financial Institutions

By | Blog

In today’s fast-paced world, the banking industry is facing a number of challenges, including increasing competition, rising customer expectations, and the need to adapt to rapidly evolving technology. One solution that has emerged to help financial institutions meet these challenges is banking automation software.

By automating many of the repetitive and time-consuming tasks that are inherent in banking operations, this software can provide a wide range of benefits for financial institutions. From improving efficiency and reducing costs to enhancing customer satisfaction and enabling better decision-making, the advantages of banking automation software are numerous and significant.

In this article, we will explore some of the key benefits of this technology and discuss how it is transforming the banking industry.

What can banking automation do for you?

Banking automation means you can manage your finances at any time, from anywhere. Seamless digital wallets, mobile banking, and scan-to-pay features have revolutionized the way we access and manage our money. Automated banking systems enable customers to quickly check balances, set up direct deposits or debits, transfer funds, and make investments with just a few clicks.

With banking automation, you can rest assured that your financial information is secure and managed accurately and efficiently. Many banks are responding to this increased demand by offering comprehensive automated services to their customers which gives us more control, convenience, and privacy over our own finances than ever before.

Increased Efficiency

Banking software is quickly becoming a necessity for financial institutions like banks due to its ability to significantly increase efficiency. With magnificent features, processes can be completed in mere seconds that would otherwise require tedious manual labor or even several days of operation.

Advanced software solutions also allow banking personnel to better monitor activity within the bank, identify customers in need of specialized services, and complete drastic reductions in paperwork at the same time. A modern banking system will benefit both staff and customers alike. No one likes waiting in long lines!  Ultimately, it is clear that with the implementation of banking software, financial institutions are sure to optimize operations and significantly reduce operational costs.

Improved Accuracy

Banking software is increasingly becoming more sophisticated and reliable. Banks are realizing the importance of investing in technology and software that can provide their customers with improved accuracy and efficiency. With the help of banking software, banks can accurately store, track, and organize a wide range of financial information as well as quickly access it when needed.

This software also allows banks to protect their data with ease and makes processing payments much simpler. Additionally, technology advancements in banking software have resulted in faster turnarounds and saved time while doing everyday tasks. All these features make banking software an integral part of any successful business’s operations.

Enhanced Customer Experience

Banking software has revolutionized the way customers interact with their financial institutions. It enables customers to easily view account information, review balances, transfer funds, and make payments from anywhere at any time.

Moreover, it allows banks to provide enhanced customer service by way of personalized notifications about account activity and features like automated budgeting tools that help customers manage their finances with greater accuracy. With these benefits, banking software is no longer a luxury of convenience – it’s become a necessity in today’s rapidly moving digital landscape.

Enhanced Security

With advances in technology, banking software offers a beacon of enhanced security to help alleviate concerns regarding financial information. For example, banking software can authenticate user identities and encrypt data — meaning individuals and businesses can reduce the risk of their assets being compromised.

Security protocols like two-factor authentication have become more commonplace, helping protect customers against potential fraud or theft. Banking software has been designed not only for convenience but for safety as well, making it a great tool for asset protection in today’s digital world.

Cost Savings

Banking software offers a unique opportunity to save financial institutions both time and money. Not only do these automated solutions streamline the handling of transactions, they also take functions such as auditing and customer service to increasingly-high levels of efficiency.

As banks attempt to compete in an ever-changing digital landscape, they can leverage the cost savings achieved via the use of banking software to bolster customer satisfaction by investing in new services and digital advertising – ultimately reaping returns both financially and within their reputations.

Better Decision Making

Banking software can provide institutions with increased visibility and actionable insights to enable faster and more accurate decision-making. By helping to automate manual processes, this software can help make complex back-end operations more efficient by streamlining costly procedures while also eliminating certain human errors that could lead to financial losses.

For executives, this kind of technology allows them to easily spot key trends in the data collected to track progress against goals and review the overall performance of their organization. With its easy access to up-to-date overviews and salient financial reporting, banking software is a powerful tool for making informed decisions quickly.

Selecting the Right Automation Software For Banks

Selecting the best bank software for your needs requires careful consideration and research. As you see, there are several factors that you have to keep in mind to ensure that you can find the best fit for your business. With tons of software available in the market, it can be quite perplexing which one has the best features that will work perfectly.

Here are some factors to consider when choosing bank software:

  1. Features – Look for software that offers a wide range of features, including core banking functionality, transaction processing, customer management, and reporting capabilities. 
  2. Scalability – Ensure that the software can grow with your business and that it can handle increasing volumes of transactions and customers. 
  3. Security – Choose software that has robust security features to ensure the safety and privacy of your customers’ data and transactions. Banks and financial institutions are a common target of online hackers out there, so it is best to have fully-secured software. 
  4. User-friendliness – The software should be easy to use and navigate, with a user-friendly interface that is intuitive and requires minimal training. Remember that not all people can easily adapt to these changes or are not yet ready to go digital, but with easiness, it is possible.  
  5. Integration – Ensure that the software can integrate with other systems, such as accounting software and payment gateways. With the right integration, it could be easier for you to use it along with other programs that you are using for the transaction. 
  6. Customization – Choose software that allows for customization to meet your specific needs and requirements. 
  7. Support and Maintenance – Look for a vendor that provides excellent customer support and maintenance services, including regular software updates and bug fixes. 
  8. Cost – Evaluate the cost of the software, including licensing fees, implementation costs, and ongoing maintenance costs, and ensure that it fits within your budget. 

Are You Looking For a Reliable Banking Automation Solution? BankLabs Is Here!

By adopting cloud-based, mobile-first approaches, financial institutions can increase operational efficiencies, reduce costs, and improve their overall competitiveness. Ready to take your financial institution to the next level with modern technology? Contact us today to learn more about our innovative banking automation solutions that can help you streamline operations, reduce costs, and improve customer satisfaction. With our state-of-the-art technology, you can strengthen your community-oriented financial institution and stay ahead of the competition.


Mike Montgomery

Two Ideas for Helping Community Banks

By | Article, Insights

Understanding the Role and Importance of Community Banks

The recent failures of Silicon Valley Bank and Signature Bank focused a bright light on community banks. Community Banks are the heart of the US Banking system, numbering about 4,500 with this number decreasing by about 100 banks each year.

According to the FDIC, these community banks “play a vital role in the functioning of the US financial system and broader economy, from lending to small business owners and farmers, to providing critical banking services in small towns and rural communities across the nation.”

While flattering to the community bank segment, that definition of the role of community banks does not do these critical financial intermediaries justice. As of 12/31/22 community banks (banks other than the 50 largest banks in the US) –

  • Held almost $5 Trillion in deposits
  • Had almost $4 Trillion in loans on their books

loan and deposits 22 Q4

Source: FDIC Call Reports

Additionally community banks:

  • Provide about 60% of all small businesses loans
  • Originate more than 80% of agricultural loans
  • Have nearly 50,000 locations
  • Employ nearly 700,000 people

Source: Independent Community Bankers of America


The Challenge Facing Community Banks

Immediately following the recent bank failures, deposits flowed out of community banks and into large money center banks seeking the apparent safety of “too big to fail” banks.  While this surge has subsequently slowed community banks face significant challenges as interest rates rise, operating costs rise and the lines between mega banks and community banks seem more clearly drawn.

Here are two ideas for strengthening community banks

  • Make deposit insurance available in amounts larger than $250,000 per account. Deposit insurance is the only type of insurance where “one size fits all”. There is no magic in the FDIC’s insurance of $250,000 per account. It is not tied to an inflation-based formula, it has simply been raised by congressional action to deal with then-current conditions.


Since 1934 the amount of maximum deposit insurance has been raised seven times. It was last raised from $100,000 to $250,000 in 2008 to bolster waning depositor confidence in the banking system following The Great Recession.


While $250,000 deposit insurance is sufficient for most consumers, many investors and businesses could be enticed to remain at community banks if additional account insurance was available.


Allow banks to decide how much insurance they need to provide to serve their depositors. Allow these banks to purchase additional deposit insurance.

Some banks may decide that the $250,000 base amount is sufficient for their depositors while other banks may, at their own expense, purchase additional deposit insurance. This also matches deposit insurance expense with the users of the insurance rather than apportioning premiums among all insured institutions as is now the FDIC’s practice.


  • Encourage community banks to better compete with large banks by creating an incentive for community banks to create incentives for time deposits. Once upon a time, financial institutions provided demand deposit accounts (checking) and time deposits (savings accounts and CDs). An entire sector of financial institutions developed that provided only time deposits (Savings and Loans and Building Associations). People bought CDs or simply saved because the interest rates available were attractive and provided a risk free return.

A quick Google search showed that today, investors can achieve 4% plus interest rates for relatively short-term CD but over time, the average CD rate has declined precipitously –

average cd rates 1984-2023

Source: Bankrate


Note that in 1984, investors were able to buy CDs with yields over 11%. It’s interesting to note that yield on the S&P 500 in 1984 was -5.9%. That’s negative 5.9%.

Let’s step back and look at that in real dollars. $1,000 invested in a CD earned about $110 while the same amount invested in the S&P 500 lost about $60. This makes a strong risk-free return look quite attractive.

By 2009, CD yields fell below 1% and yields virtually evaporated in late 2021 with banks paying .09% for a 6 month CD. Let’s put that in real dollars: $1,000 invested in a CD earned the investor 90 cents Yes, 90 cents. This seems like a disincentive to invest in a risk-free time deposit when the S&P 500 yielded about 13% that year. Clearly, investors were not motivated by the risk-free almost zero interest rates provided by bank time deposits. For over ten years, CD yields were not comparable with yields of other investments.

We suggest that the Treasury provide a credit facility available only to community banks that would allow the banks to offer a minimum 5% time deposit with at least a 100 basis point return. As interest rates float up, banks would not need to activate the facility as their return would be sufficient to encourage banks to offer attractive time deposit rates.

How could this work? Through a repurchase agreement. The US Treasury sells a treasury instrument to community banks with a remaining term approximately equal to the term of CDs sold. Contemporaneously, Treasury enters into a repurchase agreement with the community bank to repurchase the instrument in the future for an amount that would provide the bank with a 100-basis point return for the term of the CD.

This approach is consistent with the Treasury’s current moves to reduce the supply of money through Quantitative Tightening.

While 100 basis points would not provide a windfall return for the banks, it would provide a profit for community banks and a minimum 5% return might encourage investors to fly from at-risk investments to risk free investments at banks.

Offering competitive rate time deposit options to consumers might cure another national problem. It might help the 10% of Americans with no savings and the additional 39% of Americans who report that their savings balances are less than they were one year ago begin or return to saving.


no emergency savings

Source: Bankrate


This solution might get America saving again.

silicon valley bank


By | Article, Insights

Tune in to the audio version of the article:


The Silicon Valley Bank Failure

In “THE SILICON VALLEY BANK SAGA PART 1: WHAT HAPPENED? BY THE NUMBERS” we searched behind the popular press pronouncements to explore elements of Silicon Bank’s risky investment in long term treasury instruments and how these investments eventually contributed to the failure of the Bank.


Banking is Packed with Inherent Risks

Banks constantly face a variety of risks in the ordinary course of their business: in receiving deposits and originating loans or investing deposits for a return in excess of the cost of the deposits. The Office of the Comptroller of the Currency (OCC) has identified nine categories of risks banks face: Credit, Interest Rate, Liquidity, Price, Foreign Exchange, Transaction, Compliance, Strategic and Reputation.

Each day, Bankers must navigate this complex, shifting mine field of risks any one of which may be sufficient to sink the Bank.

As recently demonstrated by the Silicon Valley Bank failure, interest rate risk alone may be sufficient to cripple and eventually destroy a bank. In SVB’s failure, the sixteenth largest bank in the United States was unable to fend off a full-fledged bank run. It succumbed to a tsunami of withdrawals in only a matter of a few days.

The Bank’s end was swift and sure.


Who’s Responsible for Addressing Interest Rate Risk?

The short answer is: everyone in banking governance and management is responsible.

In a 2010 document “Advisory on Interest Rate Risk Management”, the FDIC sets out general standards for IRR management. Numerous subsequent pronouncements by each regulator reinforce the general framework expressed in this Advisory.

The Advisory admits the interest rate risks banks and bankers face ”The regulators recognize that some degree of IRR is inherent in the business of banking.”

Responsibility is then heaped on the Board of Directors –

“Existing interagency and international guidance identifies the board of directors as having the ultimate responsibility for the risks undertaken by an institution – including IRR.” (Emphasis added)

Senior management then gets its share of responsibility –

“Senior management is responsible for ensuring that board-approved strategies, policies, and procedures for managing IRR are appropriately executed within the designated lines of authority and responsibility.” (Emphasis added)

If you are reading this post, you likely have responsibility for conquering interest rate risk at your institution. Ominously, the penultimate paragraph contains an admonition regarding the failure of Directors and Managers to effectively manage IRR –

“Material weaknesses in risk management processes or high levels of IRR exposure relative to capital will require corrective action.”

History will determine the degrees of responsibility of the Board and Managers of Silicon Valley Bank bear in the Bank’s stunning failure.


What’s a Banker To Do?

In a section title “Risk Mitigating Steps” the FDIC provides some general guidance as to tools to manage IRR. Specifically, should IRR exceed or approach the institution’s limits “institutions can mitigate their risk through balance sheet alteration and hedging.”

Bankers should not wait until the risk threshold is in sight (or is behind them) to take action. Proactive balance sheet management helps banks avoid traps like the traps Silicon Valley Bank faced.

The next paragraph describes appropriate hedging activities but no guidance is provided regarding “balance sheet alteration.”

Bankers understand the asset side of the Balance Sheet. Assets revolve around two accounts: Cash and Loans Receivable.

Originating loans can be time consuming. Properly structuring loans may require expertise that is outside the bank’s skill set. Local loan demand may be insufficient to meet the bank’s lending needs. Loan servicing can be expensive and tedious.

Participate solves these problems. By providing a device-independent platform common to both Originators and Participants, participation communication is streamlined. Participation documents can be securely shared, and messages can be exchanged between Originator and Participant from within the Participate platform. The tedious back and forth process of agreeing on terms and executing Participation Agreements is handled with the click of a button. Standardized documents can be e-signed in a quick and seamless workflow.

The old participation slog can be reduced from days or weeks to minutes or hours.

Servicing is simplified. No more maintaining complex, error-ridden, non-audit friendly spreadsheets. Participants can opt-in to receive email and in-platform notifications each time a participation document is uploaded, a payment is disbursed to a participant or a draw and been processed and the participant’s share is requested. Printable forms contain wire instructions allowing them to be used as support for wire transactions by either the originator or the participant. They provide a firm audit trail.

Buying and selling participations allows banks to manage borrower concentrations, manage loan type and geographic concentrations and brings horsepower to the regulatory admonition to “mitigate risk through balance sheet alteration.”

Participate also provides a national marketplace for the purchase and sale of participations greatly expanding the scope of a bank’s contacts.


Talk to BankLabs 501.246.5148 or to discuss how we can help you manage interest rate risk.




By | Article, Insights

Failure Theories Abound

Silicon Valley Bank’s recent failure was capable of generating a systemic contagion that could have crippled economies worldwide. Rapid response by US regulators and monetary authorities avoided this close call, the likes of which may never have occurred in the economic history of the United States.

Fueled by rampant short selling, a plummeting stock price on the NASDAQ exchange and a full-blown bank run (some called it a “Bank Sprint”) driven into a frenzy by social media and instantaneous communication, Silicon Valley Bank spun out-of-control crashing ignominiously on an otherwise quiet Friday in early March 2023.

Financial pundits and financial know-littles had a field day with soundbites about the causes of the Bank’s failure. For example –

  • The Bad Management Theory – SharkTank contestant Kevin O’Leary called the management of SVB “idiots”. It subsequently came to light that companies in which O’Leary is involved had billions deposited at the bank.
  • Political Theory – Florida governor Ron DeSantis, who is expected to run for President in 2022 blamed the Bank’s failure on “WOKE politics”.
  • Off-kilter Cryptocurrency advocate Cointelegraph blamed the Bank’s failure on unnamed regulators’ conspiracy to destroy Cryptocurrency.

While the theories about reasons for the Bank’s failure are uncountable, any banker will tell you “The numbers don’t lie” and the numbers at Silicon Valley Bank foretold the likely implosion of the bank several years before the bank finally failed.


The Bank Grew at Implausible Rates

Founded in 1983, Silicon Valley grew steadily over the years with its “Dedication to Entrepreneurs”. By 2016, Silicon Valley was the 44th largest bank in the US. The bank’s relatively modest growth continued through 2019, however in 2020, the Bank’s growth exploded at eye-popping rates. From 2019 to 2020, the Bank grew from the 37th largest bank to become the 29th largest in assets.

The next year, the bank vaulted over fourteen other banks to become the 15th largest bank in the US.

FDIC Call Reports chart the incredible growth of the Bank. In the 2016-2020 period, assets had grown from $44 Billion to $114 Billion. Likewise deposits lept from $79 Billion to $206 Billion.

Silicon Valley Bank’s explosive growth did not halt there. In 2021, deposits grew 86% from $206 billion to $382 Billion almost doubling in a single year.

Silicon Valley was awash with cash.


Interest Rates Made Long-Term Treasuries Look Appealing

Banks primarily invest deposits in loans. Lending is the primary function of banking. “Excess” cash is often invested in government securities usually of a very short term to avoid interest rate risk and to roughly match the maturities of the securities with expected short term cash needs.

Silicon Valley flipped this formula with catastrophic results.

United States monetary authorities had maintained near zero interest rates for a prolonged period beginning with a precipitous drop in late 2008 in response to the Banking Crisis extending into late 2021.

Interest rates reached their nadir in late 2020 when the bell weather 10 Year Treasury Note fell to .64% –


interest rates graph

Source: Macrotrends

As long-term interest rates were falling, so were short term rates. 26 week T-Bill Coupon Equivalents yields almost vaporized, dropping to .11% during Q3 2020.

While both long and short term interest rates dropped and deposits gushed into Silicon Valley Bank, long term instruments maintained a substantially higher return than short term instruments –


2020-2021 Securities Loan growth

Silicon Valley Bank took the bait and bought long term treasury securities rather than lend the deposits or invest in short term instruments. From 2020 to 2021, securities holdings at SVB increased at a dizzying pace while loans grew at modest rates –

Interest rate increase 2022

Unfortunately for the Bank, interest rates, which had remained flat since early 2020, began to rise. In early 2022 in an effort to curb inflation that was running at 1970s-like rates, the Federal Reserve Bank began a series of seven rate hikes which would raise the Fed Funds Target Rate from almost zero to 4.25% – 4.5% in only nine months –

Interest rates increase 2022 table

Source: Board of Governors of the Federal Reserve System

As a result, a 10-year bond purchased at par in 2020 with a 1% coupon rate for $1 million would have plummeted in value to about $800,000 two years later when yields had risen to 4.5%. Silicon Valley’s massive securities purchases were worth substantially less than face value. And depositors were now withdrawing funds at massive levels.


The Bank Run Begins

While exact withdrawal rates are not available, the press has described the bank run as being driven by social media. Using Google search results as a proxy for interest in the Bank that was translated into withdrawal action by depositors, “Silicon Valley Bank” was a sleepy search term with nominal search activity until March 8 –

Interest over time graph

On March 8 – two days before the Bank failed – searches began to surge. By the day of failure search activity was at its peak –


google trends searches for silicon valley withdrawal

Sources: Google Trends

This proxy indicates that in only three days – the two days before and the day of the closing – the full-blown bank run was in progress. This conclusion is buttressed by news reports citing a single day withdrawal total at $42 Billion, leaving the Bank $1 Billion short of available cash to pay depositors.

To meet the withdrawal deluge, Silicon Valley Bank looked to their now heavily discounted long bond portfolio to meet liquidity demands. Selling at discounted prices would have effectively bankrupted the Bank. Unable to instantly raise equity, Bank management had now run face first into an insurmountable problem: Silicon Valley Bank, days before, the 16th largest bank in the United States was insolvent, had failed and required regulatory intervention to close the bank and end the bleeding.

On Friday, March 10, the California Department of Financial Protection and Innovation closed the Bank and appointed the Federal Deposit Insurance Corporation as the Receiver for Silicon Valley Bank.



What should Silicon Valley Bank have done to better manage the interest rate risk that eventually caused its failure?

Was the Bank’s failure inevitable?

What could Silicon Valley done to manage interest rate risk?



Talk to BankLabs 501.246.5148 or to discuss how we can help you manage participations and interest rate risk.