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Startup neobank Mercury jumps into personal banking

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Apr 17, 2024
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Illustration: Annelise Capossela/Axios

Mercury, a neobank focused on startups, on Wednesday announced a consumer banking product that includes 5% yield on savings and up to $5 million in FDIC insurance.

Why it matters: At a time when most fintechs are pivoting away from consumers, Mercury is moving in the opposite direction.

Between the lines: The new product, which costs $240 annually, enables Mercury to cross-sell to its high-net-worth customers.

  • These customers have businesslike characteristics, running LLCs to cut angel checks for startups or sending frequent wires to fulfill capital calls as an LP in a venture fund. Mercury Personal makes such money movements instantaneous and fee-free.
  • It also enables the user to give access to family members or personal assistants, with specific restrictions on how much they can spend and on what.
  • "We wanted revenue flow that would work in any environment," Alexey Likuev, head of personal banking, says of the rationale behind creating a subscription-based model.
  • The product has been in beta since December, with about 200 users, and will now open a waitlist.

What they're saying: "The paradox is that there are a bunch of neobanks that are primarily targeting the underbanked," says Mercury CEO Immad Akhund. "Incumbents are pushing wealth management to the ultra-wealthy. The in-between white space is what we're going after."

The intrigue: One of the company's banking partners, Choice, came under FDIC fire over its relationship with Mercury, per the Information.

  • Last year, the FDIC told Choice that it planned to limit the number of fintech accounts it could open, per the report — and threw doubt over if and when Mercury's personal banking product could launch.
  • "The Choice consent order does not expressly prohibit Mercury from opening new accounts," a Mercury spokesperson said in an email. "Mercury is still permitted to onboard new customers to Choice, and we've been building Mercury Personal in close partnership with Choice for over a year."

The bottom line: The launch Wednesday suggests Mercury's compliance efforts are moving in the right direction for Choice, the bank partner for the personal product, and the FDIC.

  • Still, the continued FDIC scrutiny over the company means more careful, gradual growth than before.

Editor's note: This story has been corrected to note Mercury's product costs $240 per year (not per month).

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