Interview: Ampersand's Kelly Brown On Deposit Aggregation, Enhanced FDIC Coverage & More
Jul 31, 2024
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Kelly A. Brown, Chairman and CEO of the deposit management startup Ampersand, dives into the intricacies of banking in light of recent challenges. She discusses the surge in interest around deposit insurance post-SVB collapse and clarifies common misconceptions about coverage. Kelly highlights optimal strategies for deposit aggregation and emphasizes the importance of proper account titling to ensure full FDIC protection. Her insights also address the complexities faced by municipalities and the vital role of fintech partnerships in navigating these challenges.
Kelly Brown emphasizes the necessity of deposit aggregation to enhance FDIC coverage, particularly in response to recent bank failures.
Consumer education on proper account titling and FDIC insurance nuances is vital to avoid potential gaps in deposit protection.
Deep dives
Kelly Brown's Career Journey
Kelly Brown's career in banking began at the age of 19 after an impactful encounter with a teller that inspired her to help others achieve financial freedom. Over her 28-year career, she has held various positions within banks, from personal banker to CEO of Ampersand, a deposit aggregation firm. After her tenure at the American Deposit Management Company, which she helped establish, she emphasized the importance of deposit aggregation in light of recent bank failures, advocating for a national authority in this space. Kelly's extensive banking experience has equipped her to navigate and improve deposit management services.
Understanding Enhanced FDIC Insurance
Enhanced FDIC insurance often involves a network of banks that together provide higher coverage limits by distributing deposits across multiple institutions. For example, a customer with a million-dollar deposit at a traditional bank may only have $250,000 covered under standard FDIC limits, but a service like Ampersand can strategically allocate those funds among several banks to ensure comprehensive protection. However, significant pitfalls arise when the account titling does not reflect proper ownership, potentially leading to uninsured deposits if one of the banks fails. Kelly highlights the critical need for awareness and understanding of account titling and management in avoiding gaps in deposit insurance.
The Complexity of Pass-Through Coverage
Pass-through FDIC insurance provides coverage for beneficiaries of pooled funds, such as pensions, but relies heavily on correct titling at the bank level. For example, if titled incorrectly, a pension fund might not provide the expected FDIC coverage for individual depositors, despite the larger fund being protected. This complexity poses challenges for consumers, who often lack the information needed to verify that their funds are protected properly. Kelly underscores the importance of educating both consumers and financial institutions about the nuances of FDIC insurance and the responsibilities involved in managing these accounts.
In this episode, I had the chance to sit down with Kelly A. Brown, Chairman and CEO at deposit management startup Ampersand. Previously, she spent 13 years at the American Deposit Management Company. Kelly and I had a chance to talk about:
* What inspired Kelly to get into banking
* The sudden attention paid to deposit insurance in the wake of SVB’s collapse
* How FBO and deposit insurance pass through models should be structured
* Consumers’ misapprehensions about what deposit insurance does and doesn’t cover