Banking on the underdogs
Iowa fintechs that provided picks & shovels to the financial services industry
The more I dig into stories for this Substack, the more I realize that we are quite adept at building picks and shovels for the technology industry. Today’s story is one such example where routine banking was made better by a small but mighty team of software engineers. The financial services industry felt the impact from this team that did it from Cedar Falls and Des Moines under Wade Arnold’s leadership.
Building for one or many
We have already seen stories of companies who transitioned from writing custom software into product companies. They recognized the significant scope and value of a bespoke technology and took necessary risks to morph it for others. Last week’s story about Geonetric was one such example for health care organizations, as were stories of David Safris of Visionary Systems, Matt Ostanik of Submittal Exchange, and Tom Halterman with Outcomes.
Snap your memory back a few decades and you’ll see programmers graduating from colleges and finding businesses ready to adopt technology. Often operating as individuals or small team of colleagues, these programmers were the first to see established businesses grapple with rudimentary problems. Many companies were formed but some followed a common thread and recognized transformative ideas. They glommed onto the ideas and massaged them into solutions for many.
Product creation, however, isn’t generally enough, and an even smaller subset of these companies built or hired the genius for making these solutions into products - one that the market desired, shaped, bought, adopted and helped grow. Many such companies who understood sentiment, creativity, customer-mindset and money were advertising or marketing agencies at the nexus of growth and creativity.
The Pejorative Cornfield Analogies
I didn’t get the opportunity to interview anyone for this story but have stitched it from the many articles (citied as sources at the end of this article). A common thread for a majority of these stories is the wonder, near amazement that the solution and team at the heart of those stories is from the cornfields of Iowa. Quotes such as “I don’t know I’d hire somebody from Iowa in the first place” from an east coast finance executive reflect a common mindset of these articles from the late 2000s.
I do wonder if this relative obscurity, a farm kid’s hustle, and a ready team of skilled engineers were the real reasons for the company’s successes and eventual exit. As much as I hated the analogies in my reading, reflectively I am glad for the relative cluelessness of the coastal executives.
From Agency to Tech Firm
Wade Arnold, a 2001 UNI graduate of computer science, published author, and speaker found himself joining T8 Design in 2007. Realizing his pay (then common stock in the flailing agency) was likely worthless, he sought and received guidance, support, and financing from a group of investors and by 2008 had assumed the role of CEO and renamed the company T8 Webware, a name aligned with the development work they performed for fast food companies such as Hardees and McDonalds.
They were also doing web development work for banks. As business grew, the company recognized it had something special when revenue from bank work exceeded that from fast food one particular month. That realization led to the young company pivoting to write a different future for itself.
State of Mobile Banking 2009
Though electronic banking is a foundational requirement for any bank today, the late 2000s were still the wild west. Only a handful of banks offered true online banking, as much of the web-front was a poor representation of most banks’ green screen terminals. Some banks simply screen-scraped data from core banking systems to display a ‘near real time’ representation while most managed to simply display last night’s data - a glorified report. The USAA patent for mobile check deposits was merely four years old and deposits were still via mail or at the teller windows.
Heavily capitalized, forward-thinking banks had begun building a true web front-end for clients to access their accounts and some, taking advantage of recent industry deregulation, bought brokerage operations to leverage their mobile expertise in banking. Names such as Brown & Co, E*Trade, Ameritrade, and more invested heavily in electronic banking and customers flowed to these seemingly native entrants to the mobile banking landscape.
Community banks, credit unions and mid-sized banks began looking to core banking system providers to also deliver mobile solutions. An afterthought for the industry incumbents, mobile banking appeared to stray from their cash cows and received meager attention. A diversion appeared between incumbent-driven electronic banking and innovators. T8 Webware customers were squarely in the latter group.
2009-2012
T8 Webware was ready for a new brand, name, and market position and Banno was born. The company had shed its old roots and began growing faster. The early premise was to build tools to help banks engage users more through intuitive, personalized, and mobile-first web and mobile sites. The team’s systems thinking and product mindset led them beyond building responsive websites to a world of APIs, real-time data, and user-centric design. Picks and shovels for the banking industry undergoing significant transformation to meet customer demand for ubiquitous mobile experiences.
One of their early products was Cre8 My Card, a way for customers to customize debit cards with photos. Another innovation brought banks the ability to easily switch their electronic check writing (billpay) services when switching banks, and mobile apps that gave customers the ability to tag transactions, identify vendors, and more via the relatively nascent smartphone interfaces.
The video link below is a remarkable demonstration of the technology that has become ubiquitous for banking customers in the mid 2020s yet was disruptively innovative just 14 years ago. It is worth a watch (if only to see the young Wade Arnold and Ben Metz, and the rudimentary yet effective way to demo a mobile app with projection reminiscent of elementary school slide shows.
Flagship Product - Grip
As the company’s understanding of digital banking grew, so did its product suite’s capability. Grip, the company’s flagship product, began its life in 2011a financial aggregator, a predecessor to software like Mint and a clear and modern-day successor to Intuit’s Quicken and Microsoft’s defunct Money. Built for the mobile generation, it brought mobile banking, personal finance management and bill-pay together. They complemented the product with an advertising platform and a design and development service for bank websites.
The growing team was simultaneously recognized for its modern and open workplace long before their adoption outside the valley. They were recognized by TAI with a Prometheus award for a small/medium software company of the year in 2012 and by American Banker amongst the top 10 fintech companies to watch in 2013. Some obviously took the ‘watch’ to heart because of what came shortly thereafter.
The Jack Henry Chapter
Jack Henry and Associates (JHA) is one of the leading providers of software and solutions for the financial services industry. Founded in 1976, it grew to become a key technology provider to financial institutions. It began trading on the NASDAQ in 1985 and continues today as JKHY and is part of the S&P400 for mid-sized American companies. It created a new brand, ProfitStars in 2006 for licensing to banks and credit unions for asset-liability management and assembled a suite of products under the brand for a singular offering.
Banno’s Grip was as a white-label product, allowing financial institutions to market it under their own brand name. Recognizing Grip’s storing profit suite, and seeing successful presentations like the one in the video above by Wade and Ben at Finovate, ProfitStars licensed Grip in 2013 and labeled it Andiamo for marketing it to clients seeking mobile banking systems. The new relationship allowed the Banno team to grow its influence with the JHA teams with Andiamo’s growing successes.
The relationship reached a new status in March 2014 when Banno was acquired by Jack Henry & Associates, a move that ensured further distribution and impact. Wade stayed on to lead mobile strategy with much of the team he had assembled in Cedar Falls and Des Moines.
Today, Banno continues its life as a growing part of Jack Henry’s digital banking suite. According to a recent press release, the Banno brand continues in JHA’s Banno Business product that helps community and regional financial institutions offer increasingly modern experiences to their SMB customers.
Revisiting Picks & Shovels
Wade continued his post-acquisition journey at JHA through 2016. Though the serial entrepreneur has had his hands in at least three other ventures since, the one that captures his attention today is a new payment platform, moov.io. In keeping with creating products that others use to enable meaningful and innovative banking services, moov publishes an API (application programming interface), a set of tools used by developers to accept, store, send and spend money through their applications. Moov has published webinars and open-source libraries to assist developers in building payments systems.
Epilogue
It is important to note that T8/Banno timeline overlaps other fintechs born in the region and supported by investments from the Iowa Economic Development Authority, local and regional angel investors, and venture capital. What is most important is to note that it was small groups of innovative engineers who built Dwolla, Banno, SmartyPig around the same 5ish years and many of whom continue to build companies within the region.
Sources
2011 FinovateFall - T8
Coder in the Cornfields - Bank Technology News, January 2013
2013 ProfitStars - Wikipedia
2014 Acquisition - PR Newswire
2024 Banno Business
I am a proud member of the Iowa Writers Collaborative, journalists, poets, authors, and artists supported by a passionate community of readers.
Continue to read these with interest. I learn so much each time! Thank you!