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Also fintechs tend to close accounts without notice easier than traditional banks

From Mercury’s own website “ Get up to $5M FDIC insurance through our partner banks and their sweep networks to ensure eligible deposits are protected.”

That's exactly the point though. Mercury is not a bank. So giving them your money and getting it back safely relies upon the partner institution.

As an example: fintech builds front end that takes deposits from user, but not much more. The deposit passes to an intermediary that pools deposits and puts them in FBO accounts at a real (FDIC) bank. Intermediary collapses. Now neither the bank nor the fintech know who had what.

This is exactly what happened when Synapse collapsed (which impacted Mercury at the time too)[0]

[0] https://www.yalejournal.org/publications/the-synapse-collaps...

They are starting their own bank!

https://www.retailbankerinternational.com/news/occ-grants-co...

https://www.linkedin.com/posts/mercuryhq_big-news-not-a-bank...

Mercury is going to be a bank, their national bank charter was approved earlier this year. I'm really looking forward to Zelle support!