Protocol | Fintech

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.

Protocol | Policy

Why Twitch’s 'hate raid' lawsuit isn’t just about Twitch

When is it OK for tech companies to unmask their anonymous users? And when should a violation of terms of service get someone sued?

The case Twitch is bringing against two hate raiders is hardly black and white.

Photo: Caspar Camille Rubin/Unsplash

It isn't hard to figure out who the bad guys are in Twitch's latest lawsuit against two of its users. On one side are two anonymous "hate raiders" who have been allegedly bombarding the gaming platform with abhorrent attacks on Black and LGBTQ+ users, using armies of bots to do it. On the other side is Twitch, a company that, for all the lumps it's taken for ignoring harassment on its platform, is finally standing up to protect its users against persistent violators whom it's been unable to stop any other way.

But the case Twitch is bringing against these hate raiders is hardly black and white. For starters, the plaintiff here isn't an aggrieved user suing another user for defamation on the platform. The plaintiff is the platform itself. Complicating matters more is the fact that, according to a spokesperson, at least part of Twitch's goal in the case is to "shed light on the identity of the individuals behind these attacks," raising complicated questions about when tech companies should be able to use the courts to unmask their own anonymous users and, just as critically, when they should be able to actually sue them for violating their speech policies.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

While it's easy to get lost in the operational and technical side of a transaction, it's important to remember the third component of a payment. That is, the human behind the screen.

Over the last two years, many retailers have seen the benefit of investing in new, flexible payments. Ones that reflect the changing lifestyles of younger spenders, who are increasingly holding onto their cash — despite reports to the contrary. This means it's more important than ever for merchants to take note of the latest payment innovations so they can tap into the savings of the COVID-19 generation.

Keep Reading Show less
Antoine Nougue,Checkout.com

Antoine Nougue is Head of Europe at Checkout.com. He works with ambitious enterprise businesses to help them scale and grow their operations through payment processing services. He is responsible for leading the European sales, customer success, engineering & implementation teams and is based out of London, U.K.

Protocol | Fintech

When COVID rocked the insurance market, this startup saw opportunity

Ethos has outraised and outmarketed the competition in selling life insurance directly online — but there's still an $887 billion industry to transform.

Life insurance has been slow to change.

Image: courtneyk/Getty Images

Peter Colis cited a striking statistic that he said led him to launch a life insurance startup: One in twenty children will lose a parent before they turn 15.

"No one ever thinks that will happen to them, but that's the statistics," the co-CEO and co-founder of Ethos told Protocol. "If it's a breadwinning parent, the majority of those families will go bankrupt immediately, within three months. Life insurance elegantly solves this problem."

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Protocol | Workplace

Remote work is here to stay. Here are the cybersecurity risks.

Phishing and ransomware are on the rise. Is your remote workforce prepared?

Before your company institutes work-from-home-forever plans, you need to ensure that your workforce is prepared to face the cybersecurity implications of long-term remote work.

Photo: Stefan Wermuth/Bloomberg via Getty Images

The delta variant continues to dash or delay return-to-work plans, but before your company institutes work-from-home-forever plans, you need to ensure that your workforce is prepared to face the cybersecurity implications of long-term remote work.

So far in 2021, CrowdStrike has already observed over 1,400 "big game hunting" ransomware incidents and $180 million in ransom demands averaging over $5 million each. That's due in part to the "expanded attack surface that work-from-home creates," according to CTO Michael Sentonas.

Keep Reading Show less
Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Protocol | Enterprise

How GitHub COO Erica Brescia runs the coding gold mines

GitHub sits at the center of the world's software-development activity, which makes the Microsoft-owned code repository a major target for hackers and a trend-setter in open source software.

GitHub COO Erica Brescia

Photo: GitHub

An astonishing amount of the code that runs the world's software spends at least part of its life in GitHub. COO Erica Brescia is responsible for making sure that's not a disaster in the making.

Brescia joined GitHub after selling Bitnami, the open-source software deployment tool she co-founded, to VMware in 2019. She's responsible for all operational aspects of GitHub, which was acquired by Microsoft in 2018 for $7.5 billion in one of its largest deals to date.

Keep Reading Show less
Tom Krazit

Tom Krazit ( @tomkrazit) is Protocol's enterprise editor, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire, and served as executive editor of Gigaom and Structure.

Latest Stories