No matter the medium, good ideas are worthless without good execution. Successful entrepreneurs are lauded for not only their creativity but also their ability to turn constructs into constructions. During the second day of the 2014 NACUSO Annual Conference, five companies went faced off in the "Next Big Idea" competition.
The five contestants pitched audience members and judges on the practicalities and values of their products. Afte nearly 250 votes were tallied, Wilmington, NC-based nCino emerged victorious. Its cloud-based Bank Operating System beat out Mortgage Harmony’s Harmony Loan, NagraID Security’s authentication and card-based payment protection technology, Buffalo Pacific’s Omni Series, and The Intercept CUSO’s near-prime lending program.
Understanding nCino’s Bank Operating System
nCino does not have servers; instead, its Bank Operating System is built on top of the Salesforce platform. nCino’s cloud-based product offers banks and credit unions a way to manage loan origination and performance. It also provides a 360-degree view of the member relationship to improve management processes. It currently has 43 clients, three of which are credit unions.
“When I interact with you as a member I want to have a 360-degree view of your business with me,” Naudé says. “I want to understand the next best cross-sell, I want to understand the base elements and how I best serve you. The moment I identify an opportunity for further business, I want to kick off a workflow … in the most efficient way possible. The way you get that efficiency is by truncating all documents at the point of entry and not re-entering data.”
Although users must manually scan in existing information, after that, the system is fully automated, paperless, and available to view on any subscriber’s device with Internet access. Naudé says his system is compatible with any core provider.
The Need For A Cloud-Based Bank Operating System
Two things prompted Naudé to get involved as a vendor in the financial services industry: one, he thought community banks and credit unions needed a more effective member relationship management solution; two, he saw a lack of connection between disparate systems in content management and business intelligence.
“Banks and credit unions are nothing but a paper factory with multiple processes,” he says. “Most companies create point solutions. These point solutions do not help efficiency because they are all disconnected.”
Naudé likens his solution to Henry Ford’s manufacturing processes, which evaluated every employee for efficiency and quality. nCino’s system allows management to evaluate employee performance. For example, management can look at lending activity and determine things like which employee is approving the most applications and who has the highest delinquency rates, ostensibly identifying the best underwriters. Naudé wants his system to help employers answer these critical questions to take better advantage of employee talent and time.
The Improvements Upon Existing Processes
nCino was developed within Live Oak Bank though it now exists independently. Naudé cites the loan process improvement the company was able to furnish at Live Oak as an example of the system’s viability and competitiveness in the financial services market. Using small business loans as an example, Naudé says nCino’s system allows a community bank or credit union to improve the timing process on its loans. Live Oak Bank, for example, cut the time from open through close from 65 days down to 42. That’s a 30% improvement.
Naudé says nCino’s system also improves compliance processes, mostly in the realm of data transparency and process efficiency. Because the system is automated, it notifies someone at the financial institution if a loan payment becomes out of date or if there are unresolved exception items.
“You’ve got people to proactively chase as opposed to what happens in the institutions today,” Naudé says. “We don’t have this stop/start operation. With us, it’s all visible. There’s no need to do anything.”
The Opportunity For Growth At Credit Unions
According to Naudé, credit unions, especially those community-chartered, have an opportunity in small business lending. To take advantage, he says, they need to start viewing themselves as “direct competitors to community banks and large banks.”
Regulations currently limit a credit union’s ability to grow through member business lending avenues, however, increases in overall efficiency, less time spent preping for compliance exams, and better member intelligence and member relationship management can assist credit unions in growing their business in any number of directions.
The Benefits Of The Cloud
Because nCino uses the Salesforce system, it circumvents the need to design proprietary security layers, entitlements, and other coding aspects of a cloud-based platform. For financial institutions like credit unions, Naudé thinks cloud computing provides an upgrade over traditional server based platforms.
“Show me the nimbleness; the quickness of change; the quickness in employment and development,” he says. “I develop at about five [times] the pace of traditional platforms.”
The Security Concerns
Though every vendor or provider who houses sensitive data struggles with the concerns over hacking and other breaches, some are more prepared than others for when the unexpected occurs. The Salesforce platform nCino uses is certified by SOC Type I, II, and III; and because it handles payments systems, it must also conform to several more stringent certifications.
“It’s all Salesforce,” Naudé says. “I piggyback off of its stringent security. The largest banks in the country are using Salesforce, and I feel pretty good that they’ve got their act together.”