Guess who still uses CD Roms?
The age of the dinosaurs is over. Here’s the problem: applying for a commercial loan is complicated. Banks are traditionalists and slow to embrace new technology. Commercial loan software, therefore, is often a complete dinosaur. This industry may just have slept through the past 20 years of customer service and software revolutions.
McMillan is the technology wizard and CTO behind Techstars Akouba which wants to propel the industry multiple technology generations. Akouba has developed a radically modern cloud-based platform for commercial loan applications and processing. This is an enormous industry, by the way: Akouba’s initial target market, small business lending, represented $552 billion of loans in 2016. Disruption seems too weak a word.
Techweek EVP, Cathal McCarthy, sat down with Nick to talk us through the Akouba opportunity.
- Cathal: Nick, let’s start with the big question – how backward is your industry, the commercial loan software space?
Nick: Apple removed the CDROM drive from their laptops about 5 years ago. Some of the most advanced banking software today receives updates once a quarter through – you guessed it – CDs sent via the U.S. Mail.
- Cathal: So what is the hair on fire problem you are solving: customer experience, or improving the efficiencies behind the scene?
Nick: Digital customer experience. Interacting with your bank using current digital approaches – if they even exist – is a frustrating experience. The truly crazy thing is that consumer lending is light years ahead of the commercial side. We fix that.
- Cathal: What does Akouba’s solution do?
Nick: We provide a digital onboarding and small business loan platform for community and regional banks. We enable financial institutions of all sizes to provide a world class digital experience to their customers and dramatically improve their efficiency – ranging from $50,000 lines of credit to $1 million equipment loans.
- Cathal: Commercial lending software – that’s off the beaten track for an entrepreneur. How did the you come up with that idea?
Nick: The founding team has all owned small businesses in the past and trying to work with our financial institution was a struggle, especially to accomplish anything digitally. It slowed down our businesses. As we talked to more and more small businesses, we heard the same thing: we wanted to work with our bank but it was too difficult.
- Cathal: Akouba is fighting against long-standing incumbents, in a market resistant to change. How does Akouba see itself winning in this industry?
Nick: The space has become more active in the last twelve months. Our advantage is the incredible team that we’ve been fortunate to build and our singular, relentless focus on building a world class customer experience.
- Cathal: So Akouba is planning to disrupt the software – is there any other harbingers of change you see in your industry?
Nick: SoFi’s application for a banking charter could be a very interesting inflection point. It would mark a dramatic convergence between the old world and new. [Editor’s note: SoFi is a large San Francisco based online personal finance company, offering primarily student loans and also mortgages and personal loans]
- Cathal: Can you tell us about that how you landed that all-important first customer, and what you learned from it?
Nick: We engage in direct sales and have a number of sales distribution channels. Our first customer is a local bank right here in Chicago that understands the transformation happening in the industry. They have been an incredible partner. Their team has really helped us understand how to build software for bankers.
- Cathal: Have you raised capital? What did you learn?
Nick: We have raised money from select angels and groups with a background in selling to and building banking institutions. Fundraising is a delicate process and it was a very smart individual who said that it always takes twice as long as you expect.
- Cathal: Nick – tell us a bit about about you. Why were you the right entrepreneur to build Akouba?
Nick: I have a background building highly secure, mission critical software. It includes developing security solutions for government radios and scaling out a document management company to multiple data centers. I love the challenge of delivering enterprise, highly secure, mission critical software.
- Cathal: So if someone reading this was looking to join Akouba – are you hiring? Who gets in the door?
Nick: We’re a lean team – just under 10 people. We’re always looking for wickedly smart folks who are eager to help change and modernize an incredibly important and critical segment of our economy.
- Cathal: Quick-fire round: Three words to describe Akouba’s culture?
Nick: Learn. Solve. Deliver.
- Cathal: Finally, lets drive your company PR people nuts: What should your company’s mascot really be?
Nick: A dinosaur riding a rocket ship.
“The truly crazy thing is that consumer lending is light years ahead of the commercial side. We fix that.”