Digital bank Arc today rolled out its international treasury product, Arc Global Treasury, to serve global startups gravitating back toward digital banks, and away from big banks, following the bank crisis earlier this year. 

The San Francisco-based digital bank founded in 2021, backed by General Catalyst, Sequoia and Y Combinator, saw many startups move to large banks after the first-quarter bank collapses, and now those companies are missing a startup-focused banking experience, Arc Chief Executive Don Muir told Bank Automation News. 

“What the startup and tech ecosystem quickly learned is that these tech-focused banks provided access to high-yield customized financial products both on the venture debt and on the high-yield cash management sides of treasury services,” Muir said. 

To provide high-yield treasury management products Arc looks to BNY Mellon which serves as its custodian bank, Muir said. 

As global startups moved to Arc over the past year, the bank’s deposits ticked up and demand for Arc products increased, Muir said. In fact, the digital bank is on track to gain 10 times its 2022 annual growth in deposits by the end of the year, he said.  

This is where Arc Global Treasury fits in.  

Arc Global Treasury

Arc Global Treasury allows companies without a U.S. entity or U.S. employer identification number to activate an Arc account and without friction invest cash in the highest-yielding, risk-free assets in the United States, Muir said. 

Arc built a stand-alone onboarding experience for international companies, allowing those startups, and Arc, to maintain regulatory compliance within each region, Muir said.  

Before today’s launch, the inbound interest for Arc Global was $500 million, up from $300 million just last week, an Arc spokesperson told BAN. 

The state of the venture funding market also pushed Arc Global Treasury’s launch as global venture funding rose 11% sequentially to $64.6 billion in Q3, according to CB Insights’ Q3 2023 State of Venture Report. In Q3, Europe’s total fintech funding accounted for $1.3 billion and the U.S. market accounted for $3.5 billion.  

“European markets seem to be rebounding a little bit faster than those in the United States, and that validates a lot of the demand that we’re experiencing,” Muir said. 

Arc does not disclose total assets under management, however, the digital bank has onboarded “hundreds of millions of dollars in the past quarter,” the spokesperson told BAN. Arc fintech clients include San Francisco-based Swayable and Austin, Texas-based Fetii.

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