BlockFi provides financial products like interest accounts, lending, cryptocurrency trading and crypto rewards credit cards to retail crypto investors via a web and mobile app. Retail investors can send their crypto to BlockFi to earn interest or use it as collateral to borrow US dollars. BlockFi also provides financing solutions, investment products, OTC trading, to institutional crypto investors via BlockFi Prime.
As a financial services platform for crypto, they need to convert US dollars to cryptocurrencies and vice versa. This requires embedding payments capabilities into their apps for retail investors to receive funds, store and attribute them to users, and enable withdrawals. They also need to automate disbursing funds for their lending and financing products.
BlockFi handles millions of transactions every month on their platform, with each product and service requiring custom money movement flows. They also need to connect to multiple banks and manage several bank accounts for funds segregation and tracking. Due to the complex nature of their business, security is paramount and custom user permissions were also required.
Today, BlockFi’s retail investing apps support four money movement and reconciliation flows:
Their lending and financing products support three different flows:
BlockFi did not directly support US dollar transactions when they first started, requiring early customers to either already own crypto, or purchase it on a third-party exchange before depositing it with BlockFi. As their products took off, they realized adding a fiat currency on-ramp was critical to future growth because it made new crypto investors more likely to use their products. It also lets BlockFi support USD-backed stablecoins to meet a growing demand from their customers for stablecoin denominated loans.
Building a simple and intuitive payments experience in their retail investing apps was top of mind for BlockFi. They chose ACH as their main payment method because it has the most coverage in the US. They could also directly debit user accounts, instead of requiring users to wire money to a BlockFi account, reducing friction in the experience. They needed an ACH solution that provided real-time payment status updates that could be surfaced in the app. They also needed to validate user’s third-party bank accounts when they are linked to BlockFi and verify their balances to reduce payment failures and returns.
For their lending and financing products, they also needed to make it easy for their loan operations team to initiate, approve, and reconcile a large number of transactions every day. Since a number of teams like fiat payments, loan operations, payment operations, and customer support would use this solution, it also needed to support multiple roles and permissions.
They initially considered using a third party intermediary as a fiat on-ramp, but concluded that it would result in a disjointed experience. It would have also reduced their control over returns and visibility into transaction risk. “Looking back, I think using a third party as our fiat on-ramp would have made it very difficult to scale to where we are today,” said Brian Cady, Product Manager for Fiat Payments at BlockFi. Having already built an integration with their first partner bank for wire transfers, they also needed a solution that would simplify using ACH with the same bank.
Setting up their bank with Modern Treasury only took a few weeks. Initially, their Loan Operations team started using the Modern Treasury web application to securely disburse and track loans. Meanwhile, the Fiat Payments team started integrating Modern Treasury APIs into their consumer applications. Having access to a web application with the same functionality as the API allowed BlockFi to immediately get value from the payment operations platform. “One of the key reasons we chose Modern Treasury is because of the centralization and customizability of the platform's payment approval rules,” said Amit Cheela, SVP Finance at BlockFi. “We can quickly and securely facilitate hundreds of millions of dollars of loan activities, all while maintaining appropriate approvals and permissions.”
Modern Treasury provided BlockFi with an easy to use and reliable API that abstracted the complexity of generating ACH files, tracking payment status and bank cutoff times, and handling failures and returns.“It would be really difficult at this point to imagine doing ACH payments without Modern Treasury. Your APIs made it really easy on the backend to get it working,” said Brian. “We’re looking forward to using your API for wires in the future and supporting more banks.”
The built-in Plaid integration also made it easy to link user bank accounts and verify balances before initiating a withdrawal, allowing BlockFi to offer features like instant account funding and higher daily deposit and withdrawal limits, without increasing transaction risk. They were also able to automate cash reconciliation to ensure money tracked on their platform mirrors what they have in their bank account.
Today, BlockFi’s Modern Treasury integration runs smoothly. Customer Support and Loan Operations teams can use the web app to address payment failures and returns easily, while the Payment Operations team can easily move funds between their accounts as needed, without getting engineering involved.
BlockFi has seen incredible growth over the past four years as crypto investing and financial services have migrated to the mainstream. They recently launched a new credit card that allows clients to accumulate rewards in cryptocurrency. Improving the loan experience is a priority; they plan on doing this by making it easier to pay down loans and get up to date information on loan and payment status. They also want to prioritize expanding internationally.
As far as the Modern Treasury integration is concerned, simplifying the user experience and integrating with new partners is top of mind. “We rely on Modern Treasury the same way we rely on cloud infrastructure,” said Amit. ”Using a service provider that specializes in this lets us focus on providing a great product and user experience to our clients.”