How BankProv switched from community banking to crypto banking

BankProv is almost 200 years old, but it's competing with new banking startups by going after the newest area of finance — crypto.

BankProv’s main office in Amesbury, Massachusetts.

BankProv's main office in Amesbury, Massachusetts hearkens back to its past. But the bank is looking to the future.

Photo: Google Street View

When BankProv was started, horse and buggy was state of the art for moving money. Now it's looking to use bitcoin and ether.

The bank was founded in 1828 as the Provident Bank — a name it kept until last July — and now wants to be a key provider for crypto companies that need banking services.

Crypto companies need traditional banking services for a variety of purposes. But they can face a hard time getting access to financial services, because big institutions may not understand or trust them.

"There's a gap in who will provide banking services for them. They're safe and legal entities," said Carie Kelly, senior vice president of virtual banking at BankProv. "They're tired of hearing 'no' from other institutions."

It's easy for community and regional banks to see nimble neobanks and national online banks just as competitors for deposits and loans. But some instead see an opportunity to work with nonbank fintechs, either as sponsor banks or by providing services to these tech companies.

BankProv, the tenth oldest financial institution in the U.S., is looking to fill those needs with a number of services, from providing traditional business banking services to crypto firms to engaging in new forms of lending backed by crypto deposits and creating a real-time payment network. BankProv's main crypto clients are crypto software and protocol developers, crypto exchanges, crypto mining operators and large investment firms, as well as a few bitcoin ATM companies.

While the crypto industry's regulatory system is tangled and still unresolved, most crypto companies are businesses that need to deal in fiat currency at some point. For that, they need a regulated bank.

While BankProv is smaller than some other competitors in crypto banking such as Silvergate, it's hoping to leverage its long history along with new products to build out its crypto customer base.

BankProv offers banking as a service, offering APIs through startup Treasury Prime to connect with its banking products. There's also traditional business banking — which is used by crypto companies — with services such as deposits, loans, wire and ACH transfers, real-time payments and remote deposit capture. BankProv has seven branches in Massachusetts and New Hampshire and $1.5 billion in total assets and $1.3 billion in total loans in its most recent quarter, according to filings.

With the high volatility and risk involved in crypto, insurance is a selling point. BankProv has unlimited insurance for its deposits through the Depositors Insurance Fund, a Massachusetts-based private insurance company started in 1934 that provides unlimited deposit insurance above the $250,000 FDIC limit. DIF has about $500 million in deposits and is funded by its member banks. That unlimited insurance is appealing to crypto companies that may have some high risk, BankProv COO Joe Mancini said.

In 2020 BankProv released its first crypto loans backed by bitcoin. With this program, businesses can get loans backed by the crypto that they hold. It's similar to a traditional loan except that instead of using real estate or stock or other assets as collateral, they're using bitcoin. These loans can be either for BankProv's clients to loan out to their customers or for the clients to get the loans themselves — though they are mainly for loaning out to end customers.

In June, BankProv extended this program to ether-backed loans through a partnership with crypto custody bank Anchorage Digital. BankProv provided a $36 million line of credit to Anchorage, which then lends out dollars to its customers that have investments in ether and want a loan. By getting this loan, the customers or investors who hold ether don't need to liquidate their crypto to get a loan.

There are some differences from a traditional loan due to the wild volatility of crypto prices. BankProv has a system that tracks pricing continuously and sends alerts if price swings could trigger a margin call. If a customer gets that notification, they have a certain amount of time to add more bitcoin or ether to return the loan to its approved loan-to-value ratio, Mancini said.

"We've tested it. Every call we've made has been fulfilled. It's good to see the system working," said Mancini.

The bank also has ProvXchange, a new service that enables real-time payments between BankProv clients. This is appealing to tech-focused companies that are used to crypto-based transactions. "You can send payments and transfer funds at any point, in real time," Mancini said. Competitors like Silvergate and Signature also offer similar services.

BankProv's big move into crypto was headed by Dave Mansfield, who became CEO eight years ago after serving as CFO. Once known as a traditional community bank, the bank has been steered by Mansfield into building out these new business lines using his regulatory background to bring a focus on compliance to these new markets, Kelly said: Mansfield was previously a bank examiner.

About four years ago, the bank started moving into crypto and BankProv started interviewing crypto businesses and finding out what they needed. It started out with deposit services for crypto companies, Kelly said.

While serving crypto companies which are dealing heavily in cryptocurrencies, the capital BankProv holds for these clients is in fiat currency — which companies use for paying bills, payroll and other cash needs. That's an important distinction for the bank. Its customers may be exploring the Wild West of crypto, but BankProv is making money by taking care of their old-fashioned finance.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories