PerkStreet Financial, a banking startup, has run out of cash and will shut down.
News of PerkStreet’s demise was first reported today by The New York Times.
PerkStreet raised a total of $15 million since its 2008 launch, amid a wave of post-credit crisis startups, according to Crunchbase. Among its investors were Highland Capital Partners and Globespan Capital Partners. Its last fundraising, a $9 million Series B, took place in 2011.
The company aimed to reinvent banking, offering a virtual banking experience with deeply discounted pricing for products like checking and debit cards. The company simply ran out of money.
Dan O’Malley, PerkStreet’s chief executive, said in a telephone interview that several factors had led to the company’s demise, including regulatory changes that made fewer potential bank partners available, the interest-rate environment, and a reduction in fees that banks could earn from merchants accepting PerkStreet’s debit card.
The company has been actively working on improving its business in recent months. In June, the company added Provident Bank as a second banking partner to The Bancorp. The banks provided PerkStreet with banking charter cover. Jason Henrichs, COO of PerkStreet, told Bank Innovation at the time:
We didn’t actually switch from Bancorp, we just added another banking partner (always part of our plan). Putting up Provident as a denovo was much faster than doing a conversion, so we did this serially to get the new technology in the hands of customers faster. The biggest benefits to the platform switch were control of the User Experience (back office immediately and we’ve begun the process of customizing the UI), tighter analytical integration, mobile+RDC and a savings account.
According to The Times, The Bancorp and Provident Bank accounts will function differently now that PerkStreet is closing down:
According to [PerkStreet's] Web site, accounts held at Provident will be closed; those held at Bancorp can remain open, if customers want. They can use its banking functions, like online bill paying, but won’t earn cash-back rewards on their debit purchases. Mr. O’Malley would not say how many customers had unredeemed rewards or how much those rebates totaled.
The company will cease business operations September 26.