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Treasury Prime’s’ software enables automatic money movement from a fintech’s loss reserve account to the FBO account any time a ledger account is in a negative balance. This feature ensures that each FBO account is balanced and has funds available for customers, regardless of whether other customers have negative account balances within the same FBO.

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Process Overview

Note: As part of the regulatory review of this account structure, Treasury Prime is comfortable with funds moving from a fintech’s loss reserve account to the NBC account that sits on the FBO where ledger accounts sit because a fintech customer does not have access to the NBC account. This account is in the org_id of the bank such that funds are never accessible to the fintech.
  1. The Bank identifies every FBO that is eligible for this automated process.
    1. This excludes operating accounts.
    2. Each FBO that is eligible should have an associated loss reserve on-core account. The amount funded in the loss reserve is determined by the Bank.
  2. Every night (on business days), Treasury Prime runs a calculation for all eligible FBO’s to identify ledger accounts with a balance below $0 and to total these negative balances.
  3. Treasury Prime programmatically compares this negative balance total to the current balance in the FBO’s Negative Balance Coverage (NBC) ledger account.
  4. Based on this comparison, Treasury Prime’s automated system transfers funds between the FBO’s associated loss reserve on-core account and the FBO according to the following rules:
    1. If the NBC account balance is insufficient to cover the negative balance total, transfer the difference from the loss reserve account to the NBC account. In this scenario, the bank must perform checks and balances to ensure that the fintech company replenishes the loss reserve account to reconcile the borrowed amount.
    2. If the NBC account balance is more than sufficient to cover the negative balance total, transfer the difference from the NBC account to the loss reserve account.
    3. If the NBC account balance is exactly sufficient to cover the negative balance total, no action is required.
  5. If this automated reconciliation process fails (e.g., a system error), an alert will be sent to the Treasury Prime team and the issue will be remediated.
  6. If there are insufficient funds in the Loss Reserve to cover the sum of the negative balances, the book transfer will fail. Note: it is the responsibility of the bank to monitor the loss reserve balance and request additional funds be added from the fintech as necessary.

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Coverage of Negative Ledger Account Balances: Flow of Funds

NBC Flow of Funds