Pierre Naudé envisions a 2018 when bank employees around the world—from teller to president—log into nCino every morning instead of email.
They’ll use the Wilmington-based cloud software platform to view daily tasks, manage the accounts of consumers and businesses, deposit cash and arrange cash pickups, process loans and manage treasury. For commercial customers, ordering a banker (or a cash pickup, for retail-oriented businesses) will be as easy as requesting an Uber ride, Naudé says. Bankers can focus on relationships and customer service, rather than the mundane, time and paper-heavy tasks of today.
His big goal is to reduce the number of times anyone visits a bank branch to 0. The impact on the banking industry, he says, will be like the iPod to CD players in the early 2000s.
“Banking is transformed into a manufacturing plant with employees assigned tasks each day and measured on quality, velocity and service,” says Naudé, the CEO of the fast-growing firm.
For the investors in nCino, that could mean a payday. Naudé expects 2018 to be the year his company hits $50 million or more in revenue and considers an IPO.
To get there, he’s pitching his investors to add to nCino’s pool of $20 million in venture capital next year. To exponentially grow the customer base and get new products to market faster, he wants to double the size of the development team. The company employs nearly 100 people today.
That won’t be without an uphill battle. “We focus the company on three things: innovation, reputation and speed,” he says. “If you ask me the biggest challenge, it’s the inertia in banking to do it the way they’ve been doing it forever.”
Venture capital and private equity firms have been interested in nCino since its start. Today, Naudé keeps a relationship with 32 potential investors, each of whom has some interest in the industry today called FinTech. It became a thing only in the last few years as banks have begun to abandon their warehouses full of servers for cloud-based technologies. There’s now a Fintech Innovation Lab in New York City, London and Hong Kong with executives from major banks as mentors, and an accelerator called SixThirty in St. Louis, funded and supported by Square co-founder Jim McKelvey
. In August, Wells Fargo announced its own accelerator program, based in San Francisco. Numerous other banks now have venture funds
focused on acquiring the latest finance technologies.
There are 680 companies categorized as financial technology startups on AngelList, and 2,140 investors. According to a recent CB Insights report
, FinTech investments reached $3 billion in 2013, up from $930 million in 2008. Most of those new companies are focused on lending, personal finance management, payments and Bitcoin, so nCino is innovating in a still new and less-funded space.
But former Citigroup and Visa executive Hans Morris, now running a VC fund making fintech investments, told the Financial Times in August, "There is more innovation in financial services now than ever."
And Bessemer Ventures' Sunil Nagaraj called nCino one of his two favorite companies from September's CED Tech Venture Conference because it offers a cloud solution to a "real problem of a specific customer", is made up of "folks with banking expertise building for banking professionals" and "has revenue to prove its working," qualities "all too rare" in the Triangle and the Valley.
nCino's story is best tracked back to its founding within Live Oak Bank
, a revolutionary business in its own right. Started in 2007 under a special charter (not available today) of the FDIC, Live Oak provides small business loans in a few niche industries—funeral homes, family entertainment centers and veterinarians. They’re industries with business owners who are likely to pay back loans and who traditionally have good relationships with banks.
Because Live Oak operated virtually—it hired the best lenders, underwriters and closers regardless of their location around the nation—Wilmington-based Mahan wanted a more efficient way to manage workflow and documentation (The average SBA loan required 148 documents) and customer relationships. Live Oak’s president (and Georgia Tech computer science grad) Neil Underwood had a technology background and hired developers to build a loan origination tool on top of Salesforce.com in 2009. It was accessible on mobile devices, so loan originators could access account information in the field. They called it nCino, which is a play on the Spanish translation of Live Oak, Encino.
Because Live Oak was so much more productive using the tool, the development team was asked to present at Salesforce’s Dreamforce user conference. And soon, the management team recognized an opportunity to spin off the tool and market it to other bank customers. They signed an agreement with Salesforce in December 2011 that allowed a company to form.
Live Oak was well positioned to provide the initial funding—a $3.6 million loan. That helped nCino grow to 10 employees by June 2012, and hire Naudé, a native South African who spent years in software development in the banking industry, most recently at the online banking firm S1 Corporation in Atlanta (Fun fact, he programmed ATM machines as a kid).
They focused on more nimble community banks with $300 million to $10 billion in assets, signing 12 customers in year one.
At the start of year two, they raised $9 million from friends and family, including $1.5 million from 22 employees. “We felt that if we all believe in the company, we’re in,” Naudé says. The company had 100 shareholders at the time, all with common stock.
They set on a path to take as much market share as possible, adding 22 additional customers by year’s end. By December 2013, with 50 employees and the entire customer base on board for year three (and spending about 25 percent more than initial contracts), they decided to expand to bigger banks. They'd need partners to infiltrate that less-nimble segment of the market.
In January, nCino signed an agreement with PriceWaterhouse Coopers for the consultancy to implement its software for larger banking clients. Naudé says eight large regional banks are now in nCino’s sales pipeline as a result of the relationship.
Another $10 million in funding from the private equity firm Wellington Management Company of Boston, along with a $1 million investment from Salesforce, came early in 2014. The original Live Oak loan also became equity.
nCino today and tomorrrow
Though speed is a key differentiator for the company, so is innovation and reputation, Naudé says. The company today sells three products that are constantly receiving upgrades. Premium is a full package of features for the bank teller all the way up to the bank’s president. Lite is a software platform designed for bank branches, giving each worker a dashboard of customized daily tasks as well as data about customers, either through web, mobile or tablet device. Standard includes everything but the customer relationship management offerings that Salesforce provides.
nCino promises integration in three to six months, compared to the typical three to four year lead time for a typical bank enterprise software project. Naudé says most banks see a return on investment within nine months. Back to his iPod comparison, "We’re all about design and elegance and ease of use.” Naudé says his products can be used as a tool to recruit talented bank workers. He believes the best in the business will move to banks using software like nCino's. He's working to build that kind of reputation.
Though the pipeline is strong for 2015—at least three big bank announcements could come by year's end—Naudé hopes to be even more aggressive.That's why he'll ask board members to approve another fundraise next year. His plan is to double down on development so that the nCino suite of products will be as useful for consumer banking as commercial. Already, the firm is preparing to launch a mobile end-user portal that allows for online transactions but also provides loan information, application and allows virtual signatures.
And plans are in place to expand to other industries, like vehicle leasing and financing. "Our view is a loan is a loan is a loan," he says.
Live Oak remains the largest shareholder, with 8.6 percent of the company. The two companies share a campus, and the same dedication to creating an innovation ecosystem in Wilmington just like that in Atlanta, Austin or Charleston, S.C.
Despite funding or IPO, nCino will stay at the beach, Naudé says.
"We like the Silicon Valley work ethic and innovation and we put that in the blender with Wilmington beach culture," Naudé says. "We get a nice, high-tech, well-paying work force attached to low cost of living and the ocean.”
Watch the company's recent presentation at the CED Tech Venture Conference: