Faced with high inflation and high-interest rates, 2023 saw three banks go bust: Silicon Valley Bank (SVB), Signature Bank and First Republic Bank. Fewer than 48 hours separated the March collapses of SVB and Signature Bank; First Republic limped on until the end of April, when it was seized by the FDIC and subsequently sold to JPMorgan Chase (JPM) -).
With people's faith in banks at the very least shaken and interest rates high, total deposits at commercial banks across the U.S. have fallen by more than $1 trillion over the past year, according to the St. Louis Federal Reserve.
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David Dindi, the co-founder and CEO of Atomic Invest, knows where that money -- as well as the future of banking -- is headed. Dindi, a member of Forbes' 30-under-30 list, started Atomic Invest in 2020 with the mission to make "wealth-building accessible to every single human being," especially those outside of the U.S. and other Western countries.
Rather than providing a Robinhood-esque platform for individual users to access investing, Dindi figured the best way to reach the broadest swath of people was by working with those companies -- such as banks, fintech startups and credit unions -- that already have a customer base, making it easy for those groups to offer investing options to their customers.
A 'One-Stop-Shop' for Money
In the three years since Atomic opened its doors, the company has grown. It now services 50 financial companies, offering investment opportunities -- complete with in-depth asset management services, rather than just single-stock trading -- for corporations and individuals alike.
"We're helping these companies that are wealth adjacent businesses to become the financial hub for their customers. So, if you're a bank, now, you're also able to offer investing. If you're a lender, you're also able to offer investing," Dindi told The Street. "We typically see that investing is a pivotal stage of everyone's financial journey. And so we're making it very easy for these wealth adjacent businesses to create symbioses between their current value proposition and invest it into essentially becoming the one-stop shop for their customers."
And in the wake of the bank collapses this year, Dindi thinks that more deposits will continue to leave traditional banks as people seek out a safer way to hold their assets that will grant them a higher yield.
Beyond fintech companies being able to offer a safer, higher-yielding alternative to traditional banks, these companies, according to Dindi, are "nimbler" than their legacy counterparts.
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"They are better suited to solve unique pain points that commercial depositors have in a self-service manner. Whereas commercial banks traditionally have had a very less-than-perfect digital experience for their depositors," Dindi said. "And so we think that these three factors, coupled with some of the catalysts we've seen from SVB's collapse to higher interest rates, will really steer commercial deposits away from commercial banks towards alternate custodians, like broker-dealers and mutual fund companies."
And while Atomic Invest's work is certainly disruptive for traditional banks, the company also works with them, all to serve its mission of making investing more broadly accessible to more people.
"I think even the banks themselves recognize the need that customers have and they're partnering with us to enable those customers to receive that full capital protection," Dindi said. "I think the primary view of the world that we see is that commercial custody, the past where it was mainly based in commercial banks is now moving towards being based with broker-dealers and mutual fund companies."
