The Best Bank for a Startup  

by Adarsh Raj Bhatt

Introduction

In 2014, American Banker found that many legacy banks are still operating on systems built 40-plus years ago. That’s made it difficult for these older institutions to adapt and offer digital innovations for the current era. It’s for that reason that the last decade has seen the rise of a fleet of neobanks or challenger banks. Without a physical branch, these fintech startups operate using a digital platform. Since they are built using faster and lighter programming languages, innovations are aplenty, outpacing traditional infrastructure. These digital banks are rolling out everything from high-yield savings accounts to mobile debit cards, all operated on a single mobile application.

What Banking Features are Important for Startups

According to a forum at YCombinator, the following features are listed as important for startups:

  • Low or no minimum account balance
  • Integration with mobile payments providers such as Stripe and Apple Pay
  • Integration with Accounting Softwares such as Quickbooks, Xero, and Expensify
  • Minimal process for corporate card issuance
  • Ability to structure the credit line amenable to VC investments
  • Free Transaction Fees

Comparative Analysis Based on Offer

Mercury

Pros:

  • Provides full stack bank accounts which includes API Access, virtual cards, and team management capabilities.
  • It also includes cash-flow analytics, programmatic payments, and instant runway estimates.
  • No minimum balance required for a Standard Account.
  • Partner rewards and free tea for “Tea Room” accounts.
  • 1%-1.5% interest on savings accounts.

Cons:

  • $250K+ required deposit for a “Tea Room” account which is an upgraded version of the Standard account.
  • Wire Transfers are paid transactions.
  • No loan or credit line product yet.

Pricing:

  • Standard = $0
  • Tea Room = $250K+ deposits
  • Domestic wires = $5 (Free for Tea Room)
  • International wires = $20

Brex Cash

Pros:

  • Free and unlimited ACH or wire transfers.
  • Higher interest rate on cash management account as the funds are stored in a low-risk government money market fund.
  • No minimum balance.
  • Offers a corporate card product built for startups.

Cons:

  • Not guaranteed by FDIC since the account works as a brokerage account.
  • Works as a bank account replacement.

Pricing:

  • $0 fee to account holders

Silicon Valley Bank

Pros:

  • Free checking account for three years.
  • Unlimited free wires.
  • No minimum balance requirements.
  • May be used to sync with accounting softwares such as Quickbooks, Expensify, and Xero.
  • Provides guidance from startup experts, curated events, VC pitch sessions, and early-stage hiring support.
  • With exclusive offers from partners such as AWS, Zoom, Vouch, Scale Factor, and Salesforce.
  • Access to proprietary reports, research and analysis.
  • Deposits are stored in a money market fund.

Cons:

  • Additional fees for overdrafts, NSF’s, returns and collection items.
  • The 1% interest rate is only for balances below $1M.
  • $50/mo account fee + outgoing wire fees after 3 years.
  • A maximum of only 6 withdrawals or transfers are allowed per month.

Pricing:

  • $0 fee for the first three years but $50/mo thereafter

Revolut

Pros:

  • Made for US domestic businesses with international customers.
  • Integration with accounting softwares.
  • Automated workflows and processes.
  • Virtual Cards for employees.
  • Fast account approval < 24 hours.

Cons:

  • Free account offers accounts for 10 team members only, 5 local transfers, and no international transfers.
  • Higher volume of transactions are available on paid accounts only.
  • Currently no loan offering yet.

Pricing:

  • £ 0 to £100/month

Bridge Bank

Pros:

  • Provides unique and flexible financing options tailored fit startups at every stage (Seed to Exit).
  • Partnered with a wide range of investors on deals of various sizes, from mergers and acquisitions to corporate buyouts and IPOs.

Cons:

  • Not Available

Pricing:

  • Not Available

Bank Of America

Pros:

  • Large distribution of ATMs and branches in the US.
  • All of their checking accounts come with account activity alerts.
  • To qualify for Platinum Honors, you must have a 3-month average combined balance of $100,000 or above. Once you meet this criterion, you’ll receive fee-free banking services for personal checking and savings accounts

Cons:

  • Paid transaction fees.
  • Rates currently running at 0.02-0.04% APY.
  • Limited transaction volume.

Pricing:

  • Fundamentals = 200 monthly transactions, $14 monthly fee (waived with $5,000 average balance, or $3,000 minimum balance, $250 debit/credit card purchases, etc.), $12 monthly fee for additional checking account, $15/month account management, $15 incoming wire transfers.
  • Advantage = 500 monthly transactions, $29.95 monthly fee (waived with $15,000 average balance, or $2,500 credit card purchases, Payroll or Merchant Services subscription, etc.), account management tools, no fees for additional accounts or incoming wire transfers.

Wells Fargo

Pros:

  • Large distribution of ATMs and branches in the US.

Cons:

  • No specific account/banking solution tailored fit for startups.
  • Savings rates of just 0.03-0.06% APY.
  • Limited monthly transactions based on checking account type.

Pricing:

  • Simple = 50 monthly transactions, $10 monthly fee waived with $500 minimum balance, $3,000 monthly cash deposits.
  • Choice = 200 monthly transactions, $14 monthly fee with 6 ways to waive (including $7,500 average balance, 10+ debit card purchases and more), $7,500 monthly cash deposits.
  • Platinum = 500 monthly transactions, $40 monthly fee waived with $25,000 average checking balance or $40,000 combined balances between checking/savings, $20,000 monthly cash deposits, interest-bearing (currently 0.03%)
  • Analyzed = Earnings credits offset transaction fees, $20 monthly fee, treasury management services, interest-bearing (currently 0.03%).

US Bank

Pros:

  • A special account for Nonprofits.
  • Large distribution of ATMs and branches in the US.

Cons:

  • Average account balance needed to waive fee = $10,000 or more.
  • Free transactions per month = 150-500.
  • Free cash deposits per month = 25-200.
  • Limitations are based on checking account type.

Pricing:

  • Monthly maintenance fee = $0-25 (can be waived)
  • Cost per extra transaction = $0.40-0.50

Keybank

Pros:

  • 1,100 KeyBank locations across the 15 states.
  • Requires an opening deposit of $25.
  • Unlimited incoming and 3 free outgoing domestic wire transfers for Business Rewards Checking Account

Cons:

  • Business Rewards requires an average daily balance of $7,500, or $20,000.

Pricing:

  • Basic = $5 monthly maintenance fee, which is waived if you maintain a $1,000 average balance per statement cycle.
  • Business Interest/Rewards = 100 transactions for free every billing cycle and unlimited bill pay support, $15 monthly maintenance fee waived with either a $5,000 minimum daily balance in a business account or a combined $15,000 balance across business deposit accounts, commercial loans, and line of credit accounts.

Chase

Pros:

  • Large distribution of Chase ATMs and branches in the US.
  • Mobile app is user-friendly.

Cons:

  • Savings rates that range from 0.05-0.15%.
  • Limited monthly transactions based on checking account type.

Pricing:

  • Total = 100 monthly transactions, a monthly fee of $12 when enrolled in Paperless Statements or $15 for paper statements, waived with $1,500 minimum balance, $7,500 monthly cash deposits.
  • Performance = 350 monthly transactions, $20 monthly fee waived with $50,000 average balance, $20,000 monthly cash deposits, 2 domestic wires per month.
  • Platinum = 500 monthly transactions, $95 monthly fee waived with $100,000 average balance, $25,000 monthly cash deposits, unlimited electronic deposits and incoming wires, 4 outgoing wires per month

Azlo

Pros:

  • Includes Stripe and accounting software integrations.
  • No required minimum balance.
  • 100% Online Banking including checks.
  • Digital Invoicing Capabilities.
  • Unlimited Number of Transactions.

Cons:

  • No international payment or transfer feature yet.
  • No paper checks / checkbook.
  • Does not accept cash deposits.
  • No corporate credit card or loan offer yet.

Pricing:

  • No fees

Mercury

Positive:

  • UI/UX is top notch and live chat support.
  • Opening an account only takes 30 minutes and activates in only 3-5 days

Negative

  • Bank features are not yet complete (i.e. credit line).
  • An issue a month ago (March 2020) was raised regarding inadequate customer service with fixing a user’s blocked account and deposit hold.

Brex Cash

Positive:

  • Seamless experience as they provide a way for the user to take a photo of their receipt and it will automatically reflect as their expenses.
  • Offers startup-friendly rewards such as discounts to recurring software subscriptions.

Negative

  • Brex only accepts startups who have raised at least $500K capital.

Silicon Valley Bank

Positive:

  • Setting up the account was completely done online.
  • Good customer service experience.
  • Able to structure a credit line in a way that is compatible with VCs according to a forum at Ycombinator.

Negative

  • 97% of founders were unhappy with SVB’s website according to a survey.
  • SVB’s website is dated according to a Product Hunt review.

Revolut

Positive:

  • Good and fast customer service experience.

Negative

Bridge Bank

Positive:

  • A forum on YCombinator says that the customer representative is helpful and that they had a good experience

Negative

  • The process of setting up an account is not seamless.
  • Xero integration is not working 100% of the time.
  • Mobile payment integrations such as Apple Pay cannot be integrated.
  • Infrastructure is outdated.
  • A user tried to link Bridge Bank to Brex but it is not working

Bank Of America

Positive:

  • A user was impressed on how BofA handles its accounts.
  • Users like its Platinum Honors Account/Status.

Negative

  • Not available

Wells Fargo

Positive:

  • A user was impressed on how Wells Fargo handles its accounts.

Negative

  • App reviews say that the iOS version of Wells Fargo app does not integrate well.

US Bank

Positive:

  • Not available

Negative

  • A user was not impressed with the service but did not explain why.

Keybank

Positive:

  • Not available

Negative

  • A user was not impressed with the service but did not explain why.

Chase

Positive:

  • Based on App Store reviews, Chase’s mobile app is user-friendly

Negative

  • A user pinpoints that Chase charges ‘absurd’ fees

Azlo

Positive:

  • Responsive customer representative.

Negative

  • 1-2 days delay in clearing ACH and checks.

Summary

Mercury

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: No

Integration with Accounting Softwares: Yes

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: No

Brex Cash

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: No

Integration with Accounting Softwares: Yes

Minimal Process for Credit Cards/ Loans: Yes

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: Yes

Silicon Valley Bank

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: Yes

Ability to Structure credit line amenable to VC investments: Yes

Free Transaction Fees: No

Revolut

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: Yes

Integration with Accounting Softwares: Yes

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: No

Bridge Bank

Low or Minimal Account Balance: No

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: Yes

Ability to Structure credit line amenable to VC investments: Yes

Free Transaction Fees: No

Bank Of America

Low or Minimal Account Balance: No

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: Yes, Only if Platinum Honors

Wells Fargo

Low or Minimal Account Balance: No

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: No

US Bank

Low or Minimal Account Balance: No

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: No

Keybank

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: Yes, Only if Business Rewards Type

Chase

Low or Minimal Account Balance: No

Integration with Mobile Payments: No

Integration with Accounting Softwares: No

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: No

Azlo

Low or Minimal Account Balance: Yes

Integration with Mobile Payments: Yes

Integration with Accounting Softwares: Yes

Minimal Process for Credit Cards/ Loans: No

Ability to Structure credit line amenable to VC investments: No

Free Transaction Fees: Yes

The AbstractOps Recommendation

In our opinion, the absolute best bank for a startup is Mercury.