What We Learned When Our Bank Stopped Working: Check Infrastructure Investments in the Wake of SVB's 2023 Collapse

It was just over one year ago today when Check’s Leadership Team was assembled in our New York office. We were reviewing our plans for the upcoming quarter, bright-eyed and excited about the roadmap we had just planned. Then, Andrew’s (our CEO’s) phone started to ring, and it did not stop ringing for the next several hours.

Silicon Valley Bank (SVB), at the time one of Check’s primary ACH processors—meaning our primary way to move money and make sure people around the United States get paid, on time—was collapsing in real time. We were headed toward every employer's (and our) worst nightmare: employees not getting paid.

What was missed by most of the coverage of SVB’s collapse at the time is that it didn’t just impact the startups and investment firms who primarily worked with SVB for their corporate banking needs. Since many firms relied on SVB’s payments processing rails to provide fintech solutions to small businesses across the country, hundreds of thousands of main street businesses were also exposed to the collapse in ways that were not immediately obvious.

Our early detection tests woke us up on the morning of Friday, March 10, alerting us to the fact that none of the many millions of dollars we had sent on Thursday night to employees across the country had been paid out. SVB hadn’t released the funds; instead, the FDIC shut SVB down and placed it into receivership. Dozens of other payroll companies and fintechs, including Rippling & Patriot Software, found themselves in a similar situation that Friday morning (as is well documented). 

Fortunately for us, and the businesses who depended on our partners’ platforms, we had built redundancy into our core payroll platform from the start. Check was able to get every employee paid on March 10 who was supposed to be paid, albeit a few hours later in the day. We earned trust with our partners because we were able to pay employees in an environment where many employees working with other payroll systems were not.

Unfortunately, many aspects of the shiny roadmap our Leadership Team had been excited about in New York had to be forcefully tossed out the window. Despite getting employees paid that day, we took this event extremely seriously. In the past year, I’m proud to share that Check has instituted all of the following improvements across our payments stack to ensure operational resilience against similar incidents:

• We now actively move money through two banks every single day, with easy routing between them. 
• We rely on JPMC, the gold standard for financial stability, as our primary payment processor. 
• We’ve implemented round-the-clock alerting for banking system failures.
• We’ve implemented early issue detection mechanisms on top of all of our payment processors, to ensure we know about any potential issues (and are able to get ahead of them) before they can negatively affect our customers.
• We leverage multiple ACH windows to ensure every payment gets delivered.
• We regularly do tabletop exercises to ensure we’re able to move quickly and efficiently if we ever do have to fail over from one bank to another.

Finally and most importantly, every single person at Check cares deeply about the responsibility of reliably paying people on time. This care is built into our team culture and our practices, from our company value of Earn Trust, to the fact that even one delayed payment is considered an outage at Check. The SVB collapse pushed us to maintain those values, and it’ll be a part of our story for years to come.