Name: Financial challenges in the fintech ecosystem: How is the industry adapting?
Uploaded: 2023-09-28T07:43:14.849Z
Duration: 310.6
Description: Nick Christian, Head of National Fintech and Specialty Finance, Silicon Valley Bank, joins Steven Ramirez, CEO, [Beyond the Arc](https://beyondthearc.com), to talk about the news surrounding SVB earlier this year and what the future holds for SVB and their clients.

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FinovateFall 2023

INT.003 Nick Christian.vtt

English

{{00:00:04}}
Steven Ramirez: Hi, I'm Steven Ramirez.

{{00:00:06}}
I'm the CEO of Beyond the Arc and
I'm here yet again at Finovate.

{{00:00:10}}
This  time it's Finovate in New
York, and I could not be happier.

{{00:00:14}}
I'm talking to Nick Christian
from Silicon Valley Bank.

{{00:00:17}}
Nick, thank you very much for joining me.

{{00:00:19}}
Thank you for having me, Steve.

{{00:00:21}}
Let's just get right to it.

{{00:00:22}}
There was a lot of news earlier in
the year about Silicon Valley Bank.

{{00:00:25}}
Some people even think that was it.

{{00:00:27}}
That there is no more Silicon
Valley Bank, but here you are.

{{00:00:30}}
So tell us, what's the state of the bank?

{{00:00:32}}
Nick Christian: Yeah yeah, a lot happened.

{{00:00:34}}
But at the end of the day
we kept serving our clients.

{{00:00:37}}
So for Q2, we added 100 net new clients
and did over a billion in transactions.

{{00:00:42}}
And so in a lot of ways we never left.

{{00:00:44}}
Steven Ramirez: Yeah.

{{00:00:45}}
So I don't know that a lot of people
understand the unique position that

{{00:00:48}}
Silicon Valley Bank plays in the ecosystem
for startups, but even in the fintech

{{00:00:53}}
ecosystem, I know that's your role.

{{00:00:54}}
You lead that operation.

{{00:00:56}}
Can you tell us a little
bit about SVB and fintech?

{{00:00:59}}
Nick Christian: Yeah, it's one
of the things that I think that

{{00:01:01}}
we've noticed is that fintechs have
unique needs and challenges, right?

{{00:01:05}}
Different than say an
enterprise software client.

{{00:01:08}}
And we get involved with
them at a very early stage.

{{00:01:11}}
And so it's imperative for us to
not only provide our general banking

{{00:01:14}}
services, but a lot of what we do is
also on the consultive side, right?

{{00:01:18}}
In terms of how you want to construct
your business so that long term,

{{00:01:21}}
it's financeable and scalable.

{{00:01:23}}
Steven Ramirez: Yeah, so Nick, last
year both at Finovate and then at

{{00:01:26}}
Money2020, it seemed like it was
an amazing time for fintech right?

{{00:01:31}}
Things were just, things
were going gangbusters.

{{00:01:34}}
But I noticed, probably by late
November into December, we seemed to

{{00:01:39}}
enter into a new phase, where fintech's
just having more challenges being able

{{00:01:43}}
to get the financing that they need.

{{00:01:45}}
I'm wondering if you've seen
that, and what other observations

{{00:01:47}}
you have about fintech today?

{{00:01:49}}
Nick Christian: Yeah, I would say
that there's been a thinning of

{{00:01:51}}
the herd given where rates are.

{{00:01:54}}
A lot of folks that built businesses when
rates were basically at zero are really

{{00:01:59}}
having to refine that business model
with rates where they are today, right?

{{00:02:01}}
And so they've come under pressure.

{{00:02:04}}
You'll see we're going to be releasing our
state of fintech report here in October.

{{00:02:10}}
Not, terribly different than
other sectors, but layoffs, right?

{{00:02:13}}
To right size these business
models is, a big trend.

{{00:02:16}}
And then I think the other piece of
it is this valuation overhang, right?

{{00:02:20}}
To your point things were going
really, well, and they were

{{00:02:22}}
raising very high valuations.

{{00:02:23}}
And they'll have to answer
for that at some point.

{{00:02:27}}
And while not directly
comparable, Instacart's IPO.

{{00:02:31}}
We'll potentially be a good proxy for
that in terms of how that performs

{{00:02:34}}
and what that means, generally
speaking for the venture ecosystem.

{{00:02:37}}
Steven Ramirez: Yeah, so the
clock is ticking on that.

{{00:02:38}}
I'm sure we'll see that unfold
over the next couple of days.

{{00:02:41}}
But you said something really
interesting about the fintech report.

{{00:02:44}}
I just know a little bit about it,
but why don't you tell us what is this

{{00:02:46}}
FinTech report and what you cover?

{{00:02:48}}
Nick Christian: Yeah we have
a very unique data set, right?

{{00:02:50}}
If you think about the number
of clients that we serve.

{{00:02:53}}
And so it gives us the ability
to provide unique insights.

{{00:02:55}}
And so what you're going
to see in the report is.

{{00:02:58}}
Some of the, some of what
we already discussed, right?

{{00:02:59}}
In terms of what does cash burn look like?

{{00:03:01}}
What are companies doing to
rightsize these business models?

{{00:03:04}}
You'll see some of these
trends on the valuation side.

{{00:03:06}}
And then I think the other piece of
it, what you mentioned is that we had

{{00:03:10}}
a very kind of peak in 2021-2022, in
terms of fundraising for fintechs.

{{00:03:16}}
That is, it's certainly come
down quite a bit, right?

{{00:03:17}}
And there's a lot of dry
powder right in the ecosystem.

{{00:03:22}}
And so some of this is going to
figure out when the floodgates will

{{00:03:25}}
break and we'll start to see kind of
investment further back into fintech.

{{00:03:28}}
Steven Ramirez: So for me personally,
I think that embedded banking and

{{00:03:31}}
embedded payments are still a tremendous
amount of excitement in this market.

{{00:03:35}}
I actually here Finovate last
year, I talked to, Kathleen from

{{00:03:39}}
Silicon Valley Bank talking about
the future of embedded payments.

{{00:03:43}}
I'm wondering if you still see that
as something high on the radar and,

{{00:03:47}}
the overall importance to fintech.

{{00:03:48}}
Nick Christian: Yeah, I think if you look
at probably the two, two hottest trends

{{00:03:51}}
in fintech , one's certainly embedded
finance, the other one's AI, right?

{{00:03:54}}
And some of it goes hand in hand.

{{00:03:56}}
But yes embedded finance, and it's not
just the fintech thing anymore, right?

{{00:04:00}}
You're seeing consumer businesses looking
to add, whether it be payment solutions

{{00:04:03}}
or financing solutions within, their apps.

{{00:04:06}}
And so it's certainly making a lot
more companies look like fintechs now.

{{00:04:10}}
Steven Ramirez: I'm just wondering from
a Silicon Valley Bank perspective I think

{{00:04:13}}
that you're one of the very few banks that
can actually work with startups to  IPO.

{{00:04:19}}
I'm just wondering what kind of, what
does it take to be able to do that, right?

{{00:04:23}}
That seems like a very
unique set of skills.

{{00:04:25}}
Nick Christian: It is.

{{00:04:25}}
We happen to have a very talented group
on the team here, on the fintech team.

{{00:04:30}}
And it's the unique skill set that
they're able to bring to these clients.

{{00:04:34}}
I think the other piece of it, too,
though, is you think Silicon Valley

{{00:04:36}}
Bank being here for 40 years and our new
ownership First Citizens Bank being around

{{00:04:40}}
for 125, we built Silicon Valley Bank with
kind of that mindset and we're going to

{{00:04:47}}
start at very early stages and then take
them all the way through into the public

{{00:04:50}}
companies and keep serving them then.

{{00:04:52}}
Steven Ramirez: Excellent.

{{00:04:53}}
Nick, I want to thank you
very much for the time today.

{{00:04:55}}
I think it's very exciting to
learn about Silicon Valley Bank

{{00:04:57}}
and where things are today.

{{00:04:59}}
And I very much look forward
to  to seeing the report.

{{00:05:02}}
I appreciate it, Steven.

{{00:05:02}}
Thank you.

{{00:05:02}}
Great.

{{00:05:03}}
And thank you all for joining us.

I'm the CEO of Beyond the Arc and
I'm here yet again at Finovate.

This  time it's Finovate in New
York, and I could not be happier.

I'm talking to Nick Christian
from Silicon Valley Bank.

Nick, thank you very much for joining me.

There was a lot of news earlier in
the year about Silicon Valley Bank.

That there is no more Silicon
Valley Bank, but here you are.

So tell us, what's the state of the bank?

Nick Christian: Yeah yeah, a lot happened.

But at the end of the day
we kept serving our clients.

So for Q2, we added 100 net new clients
and did over a billion in transactions.

So I don't know that a lot of people
understand the unique position that

Silicon Valley Bank plays in the ecosystem
for startups, but even in the fintech

Can you tell us a little
bit about SVB and fintech?

Nick Christian: Yeah, it's one
of the things that I think that

we've noticed is that fintechs have
unique needs and challenges, right?

Different than say an
enterprise software client.

And we get involved with
them at a very early stage.

And so it's imperative for us to
not only provide our general banking

services, but a lot of what we do is
also on the consultive side, right?

In terms of how you want to construct
your business so that long term,

Steven Ramirez: Yeah, so Nick, last
year both at Finovate and then at

Money2020, it seemed like it was
an amazing time for fintech right?

Things were just, things
were going gangbusters.

But I noticed, probably by late
November into December, we seemed to

enter into a new phase, where fintech's
just having more challenges being able

I'm wondering if you've seen
that, and what other observations

Nick Christian: Yeah, I would say
that there's been a thinning of

A lot of folks that built businesses when
rates were basically at zero are really

having to refine that business model
with rates where they are today, right?

You'll see we're going to be releasing our
state of fintech report here in October.

Not, terribly different than
other sectors, but layoffs, right?

To right size these business
models is, a big trend.

And then I think the other piece of
it is this valuation overhang, right?

To your point things were going
really, well, and they were

And they'll have to answer
for that at some point.

And while not directly
comparable, Instacart's IPO.

We'll potentially be a good proxy for
that in terms of how that performs

and what that means, generally
speaking for the venture ecosystem.

Steven Ramirez: Yeah, so the
clock is ticking on that.

I'm sure we'll see that unfold
over the next couple of days.

But you said something really
interesting about the fintech report.

I just know a little bit about it,
but why don't you tell us what is this

Nick Christian: Yeah we have
a very unique data set, right?

If you think about the number
of clients that we serve.

And so it gives us the ability
to provide unique insights.

And so what you're going
to see in the report is.

Some of the, some of what
we already discussed, right?

In terms of what does cash burn look like?

What are companies doing to
rightsize these business models?

You'll see some of these
trends on the valuation side.

And then I think the other piece of
it, what you mentioned is that we had

a very kind of peak in 2021-2022, in
terms of fundraising for fintechs.

That is, it's certainly come
down quite a bit, right?

And there's a lot of dry
powder right in the ecosystem.

And so some of this is going to
figure out when the floodgates will

break and we'll start to see kind of
investment further back into fintech.

Steven Ramirez: So for me personally,
I think that embedded banking and

embedded payments are still a tremendous
amount of excitement in this market.

I actually here Finovate last
year, I talked to, Kathleen from

Silicon Valley Bank talking about
the future of embedded payments.

I'm wondering if you still see that
as something high on the radar and,

Nick Christian: Yeah, I think if you look
at probably the two, two hottest trends

in fintech , one's certainly embedded
finance, the other one's AI, right?

But yes embedded finance, and it's not
just the fintech thing anymore, right?

You're seeing consumer businesses looking
to add, whether it be payment solutions

or financing solutions within, their apps.

And so it's certainly making a lot
more companies look like fintechs now.

Steven Ramirez: I'm just wondering from
a Silicon Valley Bank perspective I think

that you're one of the very few banks that
can actually work with startups to  IPO.

I'm just wondering what kind of, what
does it take to be able to do that, right?

That seems like a very
unique set of skills.

We happen to have a very talented group
on the team here, on the fintech team.

And it's the unique skill set that
they're able to bring to these clients.

I think the other piece of it, too,
though, is you think Silicon Valley

Bank being here for 40 years and our new
ownership First Citizens Bank being around

for 125, we built Silicon Valley Bank with
kind of that mindset and we're going to

start at very early stages and then take
them all the way through into the public

Nick, I want to thank you
very much for the time today.

I think it's very exciting to
learn about Silicon Valley Bank

FinovateFall

Trend

Nick Christian, Head of National Fintech and Specialty Finance, Silicon Valley Bank, joins Steven Ramirez, CEO, [Beyond the Arc](https://beyondthearc.com), to talk about the news surrounding SVB earlier this year and what the future holds for SVB and their clients.