Challenge

Historically, certain commercial banking services—such as access to debt financing—have been reserved for large corporations. Often, an early-stage startup will open its first commercial account with a neobank to take advantage of tech-forward features. Then, once the company has reached a sufficient scale, it will move its money to a legacy bank, which provides more services but is often less efficient and tech-enabled.

Arc founders Nick Lombardo and Don Muir wanted to create a platform that would meet the needs of private companies—especially its primary audience of Silicon Valley tech startups—from incorporation to IPO. The key was to combine the convenience and tech-forward features of a neobank with the stability of a top-tier national financial institution.

To power a platform that its customers would trust and never outgrow, Arc needed a stable, reliable fintech partner that offered a feature-rich suite of embeddable financial service products. “Especially following the regional bank crises a couple of years ago, brand safety and stability are incredibly important in this space. And we needed a partner with a strong reputation across technology, finance, and compliance,” said Lombardo.

Arc planned to expand and enhance its platform over time. As a result, the company needed a like-minded partner—one committed to innovation and constant improvement in the embedded finance space.

Solution

Arc found this partner in Stripe. As a Y Combinator–backed startup, Arc was well acquainted with Stripe and saw that the company had the combination of stability, forward-looking technology, and strong compliance processes its founders were looking for.

“Stripe wrote the book on API documentation and has a strong product engineering culture. We knew that as an established, trusted brand in the market, Stripe would elevate our own brand,” said Lombardo. “Stripe also has a strong commitment to embedded finance, so we were confident they would continue to innovate and support us as we scaled up.”

Arc chose to implement Stripe Treasury, Stripe’s API that allows platforms to embed financial services. With a single integration, Arc could offer its platform customers modern finance and cash flow management features built on top of commercial accounts backed by one of Stripe’s bank partners.

In July 2024, Stripe added a new partner to the network of banks powering its Treasury product: Fifth Third Bank, one of the largest financial institutions in the US. Arc used the opportunity to migrate its customers’ accounts to Fifth Third to provide a superior customer experience and further differentiate itself among its B2B fintech peers as the only one with underlying funds held at a top-20 US national bank.

Because Arc had already integrated with Treasury, the migration was far quicker and less resource-intensive than a direct integration would have been. “Because we were already partnered with Stripe, the migration didn’t require us to rebuild our infrastructure. It was more like slotting in a new bank partner on the back end,” said Lombardo.

Results

Arc migrates customers to Fifth Third in eight weeks

If Arc had to switch partner banks through a direct bank integration, Lombardo estimates the process could have taken a year. With Stripe, it only took eight weeks. “Accessing this bank through our relationship with Stripe made for a much quicker migration. And the actual money movement was near instant,” said Lombardo.

A smooth transition results in zero customer turnover

Because Arc gained access to Fifth Third through its partnership with Stripe, its customers faced far less friction than they would have with a direct integration. “We didn’t have to put our customers through new onboarding, new agreements, or new Know Your Customer processes. With the smoothness of the transition, and clear communication with our customers, we saw no customer churn,” said Lombardo.

Funding timelines accelerate and inflows increase after migration

Lombardo believes the Stripe-enabled switch to Fifth Third has driven greater customer engagement. After getting the word out about this new partnership, Arc saw customer onboarding and funding timelines accelerate materially. The average time between a customer signing up with Arc and moving funds into the account has halved.

Arc also saw its strongest growth in deposit inflows and utilization rates in the three months following the migration. Assets under management have increased by more than 40% over this period.

One of Arc’s customers summarized the value they find in the platform: “We use Arc because we want to focus on building our company, not managing our bank. They have figured out how to blend a powerful yet simple UI we expect from a fintech. More importantly, they’ve delivered all of that on top of bank partners we recognize and trust.”