Square 1 Bank and What’s Messed Up About Banking

  • JJ Hornblass
  • June 23, 2015
  • 1

canstockphoto12727310If you want to know what’s screwed up about banking, check out Square 1 Bank.

Here at Bank Innovation, we decided to do a little experiment. We’ve long covered digital retail banking startups, like Simple and GoBank. But we wondered what options were available for small businesses, like, well, Bank Innovation? So we launched a search.

Right away, we found painfully little. We were looking for an innovative service, one that included rich digital options and tools, including perhaps a PFM function that had true import for our business.

Most banks, in turns out, don’t offer much in the way of innovative products or services for small businesses, beyond RDC. It seemed like our only options were the big majors — Citibank, Chase and perhaps Bank of America (we are located in New York).

And then we came across Square 1 Bank. The bank seemed to be aimed, er, squarely at our SME demographic. Here’s how it describes its mission:

Square 1 Bank specializes in providing financial services to entrepreneurs and venture capitalists. We help growing companies and their investors navigate financial obstacles by providing access to funds and expertise. Our customized product offerings and unrivaled team of banking specialists provide a banking experience designed exclusively for you.

Based in Durham, N.C., the bank was founded in 2005, and had about $3.3 billion of assets at the end of last quarter, according to the FDIC.

Sounds great, right?

We sent a simple email to Square 1:

We are thinking about switching banks for our commercial business and are interested in learning more about Square 1. Can you please send a schedule of fees for treasury management / commercial banking services?

Square 1 calls its standard commercial banking business “Treasury Management.” Here’s the response we got from the bank’s vice president of global treasury management:

Thanks for reaching out JJ.  We only distribute our schedule of fees to customers.  If you’d like to open an account, please let me know and I’ll send you an application.

Crazy, right? I sent the VP a reply that asked, “How are we supposed to buy a service if we don’t know how much it costs?” I got no response. I’ve tried to reach out to the Consumer Financial Protection Bureau to find out if Square 1’s contingent distribution of a schedule of fees violates banking regulations (that I have gotten no response from CFPB is another matter entirely), but that’s really beside the point. Square 1’s position on disclosing fees is emblematic of the cancer and crutch that fee income has become, and how it has led banks to operate in what can only be described as a nonsensical manner.

As for Square 1 itself, well, let’s just say I wouldn’t put it on a list of banks that “help[s] growing companies … navigate financial obstacles.”

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Let us know which bank you think Bank Innovation should use. Visit our discussion on the topic in our LinkedIn group here.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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