Miami-based Onyx Private Announces Termination of Bank Operations
A digital bank backed by Y Combinator, Onyx Private, has made the decision to discontinue its banking and investment services for high-earning Millennials and Gen Zers. In an email sent to customers on March 13, Onyx stated that it will be closing all associated accounts effective immediately.
“We are writing to inform you of our decision to discontinue our services and initiate the closure of all associated accounts starting today,” the email read with a subject line of “Important Notice: Termination of Bank Operations and Account Closure.”
Co-founder and CEO Victor Santos confirmed the change in the company’s business model to TechCrunch, stating that they are “moving away from the B2C model.” However, he clarified that this is not the end for Onyx Private, but rather a shift to a “B2B white-label platform-as-a-service model for community banks, regional banks, and credit unions.”
Santos explained that they will be providing digital apps tailor-made for young affluent consumers, and this was an idea they had been exploring for the past year and had already made progress with some partners.
The Y Combinator website has listed Onyx Private as “inactive,” but Santos was unable to give an explanation for this.
“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,” Santos said.
Just last year, Onyx Private 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. The company claimed to have grown by 30% month over month since its launch and processed over $4 million in transaction payment value per month. It also stated that it was close to reaching $5 million in TPV.
When asked about the number of banking customers Onyx had, Santos declined to disclose. However, a source revealed that regulatory issues may have played a role in this decision. Santos denied this, saying that regulatory issues were not the reason for shutting down direct-to-consumer banking operations.
“Banking services [are] provided by i3 Bank.”
In an email sent to its banking customers, Onyx stated that the shut-down will take place on April 14. Additionally, it was announced that the rewards program will be discontinued effective immediately.
TechCrunch has reached out to both Piermont and i3 for comment on this matter. If you have any inside information or insights to share, please contact Mary Ann Azevedo via email at maryann@techcrunch.com or through encrypted app Signal at 408.204.3036.
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