Safeguarding your company’s payroll—or your nonprofit’s donations or your town’s tax revenue—is table stakes for CFOs. But you can access insurance on larger deposits while also ensuring the money is reinvested locally, creating jobs and fueling the economy. 

Just as important, these funds will also:    

• Earn interest     
• Remain liquid    
• Simplify your banking relationships  

Businesses, nonprofits and municipalities across the country are already using reciprocal deposit products to access deposit insurance on larger deposits by working directly with a single bank to place the deposit at multiple institutions. 

“We were mainly interested in security,” said Tom Whittaker, President and CEO of Denver-based digital agency BlueModus. “But the time savings have been huge, too. For many companies, this would probably be the main selling point—most people think they need relationships with 10 other banks to get insurance coverage. They don’t.”   

Networking Power 

BlueModus teamed up with a local bank, InBank, which belongs to a network of 3,000 institutions that provides access to significantly higher aggregate levels of deposit insurance.  

Here’s a generic example of how the network operates: say a customer has $3 million to deposit. InBank would keep the first $250,000 on its balance sheet and use a service from a prominent national fintech to send the remaining $2.75 million to 11 other FDIC-insured banks in the network, which would each take $250,000. Those 11 receiving banks would then “reciprocate” by sending $250,000 back to InBank. The full $3 million is now covered by FDIC insurance.  

Moreover, the full amount of those deposits is available to InBank to lend out locally, helping to keep the markets its customers operate in healthy. The deposits earn a competitive return and remain liquid in demand deposit accounts and money market deposit accounts.   
  
This network of 3,000 banks is coordinated by IntraFi, an Arlington, Va.-based fintech that has been offering its services for more than 20 years. 

Freeing Up Finance   

Having a single banking relationship has also freed up members of the BlueModus finance team to focus on other priorities. It’s a benefit that can’t be understated, given the importance of productivity to any company’s profitability and long-term success.   

By protecting its deposits through a reciprocal deposit service, BlueModus can focus fully on what it does best—building world-class websites for enterprise clients.    

Some of the agency’s recent projects include modernizing the Alzheimer’s Association’s web presence, creating a micro-site for Ball Corp. that helped facilitate a strategic partnership with Amazon Fulfillment, and reengineering Blue Rhino’s website to improve the user experience. 

“IntraFi has created a great tool,” Whittaker said. “It just works. We don’t even have to think about it. And that’s a really good thing, given everything we have going on.”  

If you’d like to learn more about extended deposit insurance products, please contact Dan Elder at [email protected] or (703) 292-3373.