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Live Oak Announces Joint Venture On Digital Banking Services

By Jenny Callison, posted May 10, 2017
Live Oak Bancshares Inc. is branching out again.
 
The Wilmington-based parent of Live Oak Bank announced that it is entering into a joint venture with payments firm First Data.
 
The goal of the 50-50 venture, according to chairman and CEO James “Chip” Mahan, is to “fully digitize products and services on both sides of the balance sheet.”
 
Mahan and other LOB officials spoke during a Wednesday morning conference call about the deal, which Live Oak CFO Brett Caines said was an equity investment.
 
Live Oak’s spinoff, nCino, has provided the systems for a fully electronic commercial lending process. Officials said they hope the partnership with First Data will do the same thing for the deposits side of the ledger.
 
Each partner contributes something distinctive to the venture. Live Oak offers the work it has done on its Acorn project, designed to bring innovation to merchant services, online banking and bill payment products and services. Atlanta-based First Data will provide the online banking tools in its arsenal, which stem from the company’s acquisition of FundsXpress 10 years ago.
 
FundsXpress has 550 bank customers, according to Live Oak officials.
 
“Online banking and bill pay is a bit of a yawn – kind of a rip-and-replace – but if we can deliver to those 550 banks a next-generation platform with both the lending and deposits side, that would be quite interesting,” Mahan said, adding that Live Oak Bank will be the effort’s “guinea pig” before the new suite of products and services is rolled out to those banks.
 
Neil Underwood, president of Live Oak Bancshares, said the new venture basically enhances online banking.
 
“It’s what Chip and I were doing 20 years ago in Atlanta but with new technologies and new platforms,” he said.
 
Mahan said that the business consulting firm KPMG estimates the value of the still-to-be-named consolidated firm will be about $145 million. The new company will be a subsidiary of Live Oak Bancshares.
 
Underwood said his team continues to develop online deposit-related products, noting that they launched Acorn’s savings application this week.
 
“You can go online and enroll in our savings platform. Bill pay is the next piece,” he said.
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