July 16, 2024
YC-backed digital bank Onyx Private tells customers it’s closing their accounts TechCrunch Fintech

Miami-based Onyx Private, a Y Combinator-backed digital bank that provided banking and investment services for high-earning Millennials and Gen Zers, is terminating its bank operations.

In a March 13 email to a customer viewed by TechCrunch, with a subject line that read: “Important Notice: Termination of Bank Operations and Account Closure” Onyx wrote, “We are writing to inform you of our decision to discontinue our services and initiate the closure of all associated accounts starting today.”

Co-founder and CEO Victor Santos confirmed to TechCrunch that the company was “moving away from the B2C model” but said that it was changing its business model, not shutting down.

Y Combinator has listed the company as “inactive” on its website, something Santos could not explain. (Update: The text has since been updated post-publication).

He said Onyx will be shifting to a “B2B white-label platform-as-a-service model for community banks, regional banks, and credit unions” that want to launch digital apps built for young affluent consumers. Santos claimed that Onyx had been exploring the idea over the past year and had made developments with some partners.

Less than a year ago in May, the startup announced that it had raised $4.1 million in venture funding from investors such as Village Global, Y Combinator, Global Founders Capital, One Way Ventures, 186 Ventures and Olive Tree Capital. At that time, the company said that since its launch nearly a year prior, Onyx Private – which said it wanted to be the “next generation UBS” – had grown 30% month-over-month and was processing over $4 million in transaction payment value per month. It also claimed to be nearing $5 million in TPV (total payment volume).

Santos today declined to disclose how many banking customers Onyx had. Although a source told TechCrunch that regulatory issues may have played a part in this decision, Santos dismissed that, telling us that no regulatory issues caused the startup to shut down its direct-to-consumer banking operations. 

He added: “It was purely a strategic decision that allowed us to leverage the base of existing FIs [financial institutions] and use the technology we have built to scale in a more capital-efficient manner.”

At the time of its fundraise, the company had named Piermont Bank as its banking partner. Today on its website, Onyx says that “banking services [are] provided by i3 Bank.” Santos told TechCrunch that Onyx “started with Piermont but transitioned last year to i3.”

Piermont declined to comment. TechCrunch has reached out to i3 for comment.

In the email, banking customers were told that the shut-down will take place on April 14 but that “cessation of our rewards program” was “effective immediately.”

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