Upload
sean-sposito
View
224
Download
0
Embed Size (px)
Citation preview
7/30/2019 Coder In The Cornfields
1/3
PROFILE
Cant KnockHis HustleIowan Wade Arnold is among the latest crop of techiesthat at any other time wouldnt consider banking
By Sean Sposito
Wade Arnold leans against the wood veneer bar at Zsavooz, a busy strip mall
restaurant lled with pool tables and dart boards o highway 58 in Cedar
Falls, Iowa. The 34-year-old head of the banking technoloy company
Banno gestures around the noisy room.
I have all my internal meetings here, he says. We call it Banno East.
This 40,000-person city is far from the tech capitals of New York and San Francisco. But
it is where, with no acumen for banking at the start, Arnold transformed his company from
a web design shop into one of the top nancial technoloy outts to watch in the coming
year.Roughly four years ago, in a series of lunch meetings at this bar, he negotiated a deal
that netted Banno a half-million dollars in investments from local commercial real estate
developers.
Now there are nearly 60 programmers, sales people and IT sta; about $4 million in rev-
enue; and almost 400 bank customers.
This former, semi-pro BMX rider is part of a new generation of entrepreneurs trying to
capitalize on the growing need for technoloy at banks.
Today you can tell hes excited. His voice rises at the end of every sentence, his blue eyes
wide.
Arnolds tiny company has just landed its biggest get yet: a partnership with ProtStars, a
division of established core banking company Jack Henry (JKHY).
ProtStars just began oering bill pay and mobile remote deposit capture technoloy
through Bannos Grip a smartphone app that helps bank customers decide whether to
WADE ARNOLD
banktechnews.com
January 2013 | Bank Technology news 11
011_BTNJan13 1 12/19/2012 1:32:52 PM
7/30/2019 Coder In The Cornfields
2/3
accomplishments: By kd d w D-ux d pfs; ad aFt bd.
Wd ad, ceo,B
street creD: h w u w, gud F dv d w b y .
PROFILE
make purchases, without requiring integration with a
banks core system.
And earlier this fall, Banno launched a billpay
switching service with Deluxe that gives banks and
credit unions the ability to help new customers
change banks. The roughly $178-billion-asset Sun-
Trust is piloting that feature as a part of Deluxes
SwitchAgent software.
For Banno, such high-prole partnerships area stab at legitimacy in an industry so risk-averse
that newcomers selling technoloy are ignored as a
matter of course.
The barrier to entry to [oer] ntech directly to
banks is humongous, Arnold says. Its been a wild
past 14 months.
Barriers to Bank techFew early-stage companies get as far as Banno, and
even fewer last.
Traditionally, banks have wanted everything
under their own roof. Executives were hesitant toeven rely on proven third parties such as IBM, much
less unknowns.
I dont know if Id [hire] somebody from Iowa
in the rst place, jokes Brian Riley, a former bank
executive, who i s currently a senior research director
in the bank cards and retail banking practice at CEB
Towergroup.
That, however, has star ted to change.
Over the past decade, our world has become so
highly interconnected that today, if there is a good
idea somewhere in the world, I could be on a plane
to get there tonight, says Philip J. Philliou, a pay-
ments consultant who evaluates startups nationwide.Even so, those selling Web services to even the
smallest of banks must catalogue every change not
to mention every version, whether its displayed on a
desktop, tablet or other mobile device.
Its a matter of self-preservation. A passel of
regulators could, at any time, call on a bank or credit
union to produce the rate changes displayed on a
mobile app or static Web page at an earlier date.
Many larger banks will at-out refuse to work with
outsiders that dont have millions of dollars in liquid-
ity, simply for liability reasons, Riley says.
And then theres the series of certications an
entrepreneur must pay for and pass, to convince
potential customers its safe to use the startups ser-
vices. Yet there is no question where much progress
in this industry starts with people like Arnold.
hacker @ heartIn the mid-2000s, before working on big banking
problems, Arnold was plugging away on open source
software, specically working on a way to push data
immediately from a server to a Flash player (Adobesmultimedia platform used to add animation, video,
and interactivity to Web pages).
He co-wrote The Essential Guide to Open Source
Flash Development, after so impressing Adobe
executives with his work that they hired him to speak
at conferences and evangelize their software.
In 2007 Arnold joined T8 Design, what is today
Banno. He became the lead on a dozen projects for
the then two-year-old ad agency, most of them con-
tracts with fast food restaurants.
Arnold was paid in common stock, a move hed
later regret when he realized that T8 was heavily
in debt. He eventually approached two real estate
developers for help keeping the company aoat and
preserving his shares.
What happened instead was a series of drama-
lled events in which the previous CEO was forced
out and the pair of investors wrote a check for
$500,000 directly to the bank (they now own half of
Banno) and put Arnold in charge of the new T8 Web-
ware at the beginning of 2008.
Bannos bank website business took o the fol-lowing year. The longer story is that the majority
of our revenue came from companies like Hardys,
AT&T and McDonalds and Fortune 500 companies
that we were doing software development for, says
Arnold, who then was selling to the companys larg-
est accounts. Then in 2009, we had one month in
which the rest of the company sold more in banking
than I sold in professional services.
That created a shift in focus.
The company began oering services that evolved
into Cre8 My Card, a product that lets banks oer cus-
tomers a way to customize debit cards with photos.
Just this past year, Banno began selling respon-sively-designed websites to community banks and
credit unions that keep track of a customers prefer-
ences, redesigning content based on a users device,
whether thats a tablet, smartphone or desktop.
At heart, Arnolds a geek who codes as way to
learn about the world around him.
It shows through his repertoire of weekend activi-
ties over the past year. Hes reverse engineered a
Square-like smartphone app after ordering a 99-cent
card reader from the Chinese manufacturer that
makes Jack Dorseys dongles; built his own processor
software that completes American Express trans-
actions, and created a mobile payment app afterborrowing point-of-sale equipment from a bar and
restaurant company, Barmuda, that shares oce
space with Banno. All, just in his spare time.
And he renamed the company last year after his
young sons imaginary friend. It was his way, he says,
of claiming Banno as his own absolutely nothing
from T8 Design remained.
Bannos gripThere has been a urry of interest in the company
since Arnold and his product manager, Ben Metz,
announced Bannos mobile banking application Grip
t b y []
f dy bk
ugu. ib wd 14 , y
Wd ad g
gyu
wkg w bk.
12 Bank Technology news | January 2013 banktechnews.com
012_BTNJan13 2 12/19/2012 1:33:10 PM
7/30/2019 Coder In The Cornfields
3/3
at FinovateFall in 2011. The startup has had meetings
with executives from some biggies, including Citi,
Capital One and Visa.Grip oers mobile personal nancial management
and beyond. Banno buys information from search
engine giant Google and scrapes the social Web for
clues on where people shop and check-in: think Four-
Square. But though the iPhone app took only a month
to develop, the process behind it involves complex
machine learning and took a year and a half for Ban-
nos programmers to build.
Its an engine that will someday be used to allow
banks to cross-sell mortgages and target oers based
on algorithms that track bank customers, Arnold
says. The company wants to eventually give banks an
intelligence report on each of their customers. Thismight include a tip sheet on a customer who should
be oered a car loan because the amount of cash in
her bank account has jumped by 22 percent over the
past month and she constantly searches online for
new Ferraris.
the hawkeye effectPerhaps Bannos greatest strength is that Arnold kept
it in Iowa.
In a state college grads cant wait to leave, the
median age in the oce i snt much older than 25,
says Abby Goltz, a 26-year-old account manager at
Banno. The atmosphere here is light, with Arnold, a
rap music acionado with a pension for Jay-Z, oftenmaking sure it stays that way.
So the other day we were in a standup [meeting]...
and someone was explaining something that we got
completed, and Wade says: So, translation, youre
the s**t, Goltz says, laughing. And Im thinking
Clique on the new album by Kanye West.
The whole feel of the company is young and hip,
with tall Steelcase chairs and chest-high tables.
Indeed, in Bannos wing of the shared oce space,
theres a foosball table, free Red Bull, and there are
no oces except for Arnolds, which is more ceremo-
nial than functional. Its mainly where he keeps a keg
of Stella Artois (the Budweiser of Belgian beers) alongwith a bottle of Bombay Sapphire.
Not even Metz, Arnolds No. 2 man, has his own
desk. Metz roams the halls speaking to developers,
copywriters and account managers. The entire build-
ing feels like the common area of a dorm room lled
with friends. For instance, Eric Batterson, Bannos
head of user interface design, was the best man at
Arnolds wedding.
And to bolster Bannos recruiting program, Arnold
is a member on the computer science advisory board
at the nearby University of Northern Iowa, Arnolds
alma mater. There is no better hire you c an make
then a kid that grew up on a farm that has a computer
science degree, says Metz. When you tell a farm kid
he doesnt have to work from sunup to sundown and
gets to sit down all day, the Iowa-grown 20-some-
things sometimes look at you funny.
There have been state-funded perks, as well.
In September, the Iowa Economics Development
Authoritys Innovation Acceleration Fund matched a
$1 million private loan from one of Bannos lenders,
according to a published report.Earlier this year, that same agency doled out
$120,000 in tax incentives to the startup.
whats around the cornerIts a cold night on the plains as Arnold drives his late
model GMC Yukon downtown.
He usually isnt dressed this chic in designer
jeans and $400 Allen Edmonds leather shoes. Its
usually graphic tees, often times carrying his compa-
nys logo, and sneakers.
Arnold walks through the employee entrance
at Montage, a restaurant that could, except for theprices, be easily transplanted to Midtown Manhattan.
Several senior members of Arnolds sta (all
under 40) are waiting for him at a table in the back,
among metal sculptures made by a local artist . The
centerpiece is a tall, hollow prism supporting a solid
sphere.
And the wine ows: At least one $145, four-year-
old bottle of c abernet sauvignon from Napa.
The conversation quickly turns to bank tech.
When asked, Arnold insists that hes completely
uninterested in selling his company in the cornelds.
He blurts out that last year he was oered eight
gures (read: more than $10 million) from an estab-lished Austin ntech vendor whose CEO has an
anity for the movie 300.
Everyone laughs.
Metz would later say Arnolds greatest strength
is that hes a product guy, someone who gets the
design, functionality and utility of a piece of software.
Thats on display as Arnold sketches out Bannos
long-term business plan on a piece of notebook paper
sitting on the table something other executives who
have worked with him say hes prone to doing.
I still feel like Im hustling and trying to catch up,
he says. All I know is that we have to get somewhere,
and see whats around the corner.
banktechnews.com January 2013 | Bank Technology news 13
013_BTNJan13 3 12/19/2012 1:33:34 PM