Curql Invests in Fintech Serving Large-Dollar Depositors
ModernFi’s reciprocal networks allow the NCUA to insure depositors for more than $250,000.
The Curql Collective CUSO has invested an undisclosed amount in a fintech providing extra insurance and other services for large-dollar depositors.
A news release Wednesday from Curql of Des Moines, Iowa, said its investment in ModernFi, a New York fintech, was its first through its Curql Fund II. The TechCrunch.com website for technology news reported in January that ModernFi had raised $23 million in funding.
The NCUA and FDIC insure up to $250,000 per depositor. For larger depositors, ModernFi offers a back-office process that allows a credit union to extend NCUA coverage beyond the $250,000 limit through a reciprocal network of other credit unions.
For example, a credit union with a $1 million depositor sends $250,000 each to three credit unions, where the funds are insured by the NCUA, while the three credit unions send back matching amounts to the original credit union to eliminate any impact on balance sheet size.
The service became more important in the wake of the March 2023 failure of Silicon Valley Bank of San Francisco after a run on deposits by people and businesses with deposits exceeding the $250,000 insurable threshold.
Curql said ModernFi’s extended insurance program allows credit unions to increase and retain their base of deposits from “businesses, higher-net-worth individuals, nonprofits and public funds.”
Nick Evens, Curql’s president/CEO, said reciprocal networks have long been used by banks.
“It levels the playing field for credit unions,” Evens said. “Not only is ModernFi building the first full-service deposit network for the entire credit union industry, they’re also greatly expanding the audience of prospective business and consumer members that credit unions can serve.“
“It’s empowering them to compete more effectively against larger financial institutions, which is exactly why credit unions are prioritizing deposit growth and why Curql chose to invest,” he said.
Curql said credit unions can also utilize the network to manage their balance sheets by sourcing funding on demand or sweeping excess liquidity.