What ModernFi Does

At its core, ModernFi runs a deposit network that connects participating financial institutions. This network enables institutions to sweep and exchange deposits among one another in order to provide their customers with access to expanded Federal Deposit Insurance Corporation (FDIC) coverage, or National Credit Union Administration (NCUA) share insurance coverage in the case of credit unions.

Standard deposit insurance limits coverage to a set amount per depositor, per insured institution, per ownership category. For customers with large balances, this creates a challenge because amounts above the insured threshold are not protected. ModernFi's network addresses this by distributing large deposits across multiple institutions in the network, allowing a single customer to receive coverage well beyond the standard limit while continuing to work with their primary bank or credit union.

For the institutions themselves, ModernFi provides a way to retain large depositors who might otherwise move funds elsewhere in search of greater protection. It also gives institutions the ability to source deposits when they need additional funding, and to place excess deposits off their balance sheet when appropriate, giving them greater flexibility in managing their liquidity and balance sheet composition.

Core Products and Services

Deposit Network

The foundational offering is the ModernFi deposit network, which links member banks and credit unions. Through this network, institutions can:

• Provide customers with millions of dollars in aggregate deposit insurance coverage by spreading funds across multiple insured institutions.
• Retain deposits that might otherwise leave due to insurance concerns.
• Access reciprocal deposit arrangements, where institutions exchange deposits to keep funding within the network.

Extended and Expanded Deposit Insurance

ModernFi enables financial institutions to offer their depositors access to significantly higher levels of insurance protection than a single institution can provide on its own. This is particularly valuable for customers such as businesses, municipalities, nonprofits, high-net-worth individuals, and other entities that maintain large cash balances and prioritize safety.

Deposit Sourcing and Funding

Beyond insurance, ModernFi helps institutions manage the funding side of their balance sheet. Institutions can use the network to source deposits on demand, providing a flexible tool for meeting liquidity needs and supporting lending activity. This helps institutions smooth out fluctuations in their deposit base and reduce reliance on more volatile or expensive funding sources.

Balance Sheet Management Tools

ModernFi provides institutions with technology to actively manage deposits, including the ability to move deposits on and off the balance sheet as needed. This flexibility supports treasury and finance teams in optimizing their funding strategy, managing interest rate exposure, and responding to changing market conditions.

Technology and Integration

A key differentiator for ModernFi is its emphasis on modern, technology-driven infrastructure. The company offers integrations and a streamlined onboarding experience intended to reduce the operational burden traditionally associated with deposit network participation. This includes application programming interfaces (APIs) and digital tools that connect with existing banking systems, allowing institutions to adopt the network without extensive manual processes.

Who ModernFi Serves

ModernFi's services are directed primarily toward:

• Community banks seeking to compete with larger institutions on deposit safety and retain valuable customer relationships.
• Regional banks looking for flexible funding and balance sheet management tools.
• Credit unions aiming to offer members expanded share insurance coverage through NCUA-insured arrangements within the network.

The end beneficiaries of these services are the depositors of these institutions, including businesses, government and municipal entities, nonprofit organizations, and individuals with substantial deposit balances who want the reassurance of extended insurance coverage while banking with an institution they trust.

Value Proposition

ModernFi's central value proposition rests on several themes:

• Deposit retention and growth: By enabling expanded insurance and reciprocal deposit arrangements, institutions can keep large depositors and attract new funding.
• Safety for depositors: Customers gain access to insurance coverage far beyond standard single-institution limits, addressing a major concern for those with large balances.
• Operational efficiency: Modern technology and integrations reduce the friction and manual effort historically involved in participating in deposit networks.
• Balance sheet flexibility: Institutions gain tools to manage liquidity, source or place deposits, and respond to market dynamics.

Industry Context

The relevance of ModernFi's offerings grew notably in the wake of heightened attention to bank deposit stability and the risks associated with uninsured deposits. Events that highlighted the vulnerability of institutions to rapid deposit outflows underscored the importance of tools that help banks and credit unions retain funding and reassure large depositors. Deposit networks that distribute funds across multiple institutions to expand insurance coverage became an increasingly important part of the toolkit available to financial institutions seeking to strengthen their deposit franchises.

ModernFi enters this space with a focus on bringing modern software and a streamlined experience to a function that has traditionally been served by older, more manual systems. Its aim is to make advanced deposit and liquidity management capabilities accessible to a broad range of institutions rather than only the largest players.

Summary

ModernFi is a United States-based fintech company that operates a deposit network for banks and credit unions. Its platform allows these institutions to offer their customers expanded FDIC or NCUA insurance coverage, retain and grow deposits, source funding when needed, and manage their balance sheets with greater flexibility. By combining the mechanics of deposit networks with modern technology and integrations, ModernFi seeks to help financial institutions of all sizes strengthen their deposit bases and provide greater safety and value to their depositors.