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Banking & Finance

Wilmington’s Future In Fintech

By Jenny Callison, posted Apr 6, 2018
Could the presence of two fast-growing financial technology companies in Wilmington spur the growth of the area as a fintech hub, just as the development of PPD launched a contract research cluster here?

State and local officials think it’s possible.

Wilmington has already become a fintech hot spot, said James “Chip” Mahan, chairman and CEO of Live Oak Bancshares. He points to the recent launch in Wilmington of Apiture, Live Oak’s joint venture with Atlanta-based First Data. And he touted the success of bank software company nCino, a 2012 Live Oak spinoff.

Rob Burrus, dean of the Cameron School of Business at University of North Carolina Wilmington, said there’s potential for more.

“Certainly Live Oak and nCino have shown that the fintech sector can thrive in the Wilmington area. Obviously, Live Oak’s recent [business] investments in the Wilmington area, starting with Apiture, shows that it’s possible for other companies that are in the tech sector to station a company, headquarter a company and to thrive here,” he said. “We have a very attractive location, lots of things happening on the entrepreneurial front and great opportunity.”

The term “fintech” generally refers to an industry that creates computer programs, applications and other technology to serve financial services providers.

Brooks Raiford, president and CEO of N.C. Tech Association, pointed to the need for certain ingredients to form a cluster in any sector. Those ingredients include capital, talent, an entrepreneurial environment, an education infrastructure and demand.

“With North Carolina being a strong banking center … it provides a good market for [fintech] companies,” he said. “And Wilmington certainly has a lot going on in the entrepreneurship space.”

Both Live Oak Bancshares and nCino have demonstrated they can raise capital to fuel rapid growth. And now, Canapi, Live Oak’s venture capital unit, is attracting funding to invest in and partner with other financial technology companies. To date, it has drawn strategic capital from several banks – SunTrust, Ally, Key and Woodforest – that will use innovative software coming from these partnerships, according to Canapi managing director and Live Oak President Neil Underwood.

Recently, Canapi made a Series A investment in Greenlight, the Atlanta-based creator of a debit card for young people. Early-stage investment by Canapi will give the venture capital firm a degree of influence in young fintech companies, Underwood said. For example, Canapi will influence them to have a presence in Wilmington. He hopes Greenlight will at least establish a center here.

Mahan echoes that vision. Looking out at the spreading Live Oak campus, where work is underway on a third office building and a parking deck and where plans are progressing for a fourth building, he said, “We could put 4,000 people on this campus, and we fully intend to do that.”

Mahan expects that Apiture will eventually move from downtown Wilmington to the Live Oak campus, which could ultimately consist of up to eight office buildings.
Underwood’s vision for that campus is as a fintech park, home to many entrepreneurial companies.

Canapi’s investments in fintech companies “will create an ecosystem,” said nCino CEO Pierre Naudé.

Just as some former PPD employees have leveraged their know-how to spin off CRO-related ventures in Wilmington, Naudé anticipates the same thing will happen within the local financial technology realm.

“A couple of bright kids hop across the street and start new companies. We at nCino don’t mind being the anchor of that ecosystem. If that happens, it makes it easier for us to recruit,” he said.

A reliable supply of talent is essential if fintech is to take root here. Officials at Live Oak and at nCino say they are finding that talent both locally and elsewhere.

Underwood said that it may take a bit more effort to recruit tech talent to Wilmington, but once new hires taste the benefits of living in a small coastal city, they tend to stay.

Now that the company has about 530 employees under its spreading branches and with multiple accolades from the banking industry, Live Oak officials believe the firm can sustain its workforce through an inclusive, entrepreneurial workplace culture.

“The average career [in one company] of an engineer in Silicon Valley is 18 months, and then they are looking for other jobs,” Underwood said. “The software industry is relatively fraternal: they see their teammates getting jobs here, and ask themselves, ‘Why am I commuting?’”

Naudé points to a 2 to 5 percent turnover rate in his company, depending on the quarter. “If you are in Silicon Valley, you’ve got 25 percent turnover, which means your staff turns every four years,” he said.

Since 2012, nCino has increased its workforce to 450 people; Naudé expects the software company to employ 600 by the end of 2018. It touts to prospective hires its location as well as its award-winning company culture and its internal opportunities and has placed its recruiting function within its marketing department, not in human resources.

“That’s the benefit of being a brand and getting awards: These things spread with social media,” Naudé said. “Literally, we are seeing a stream of applicants.”

Underwood said local educational institutions are a real benefit.

“We’re working closely with UNCW and Cape Fear Community College and will continue to do so,” he said. “We have had tremendous success with graduates of UNCW; it’s in the hundreds.”

A recent addition at UNCW of an information technology joint degree program with the Cameron School and the university’s computer science department is an example of UNCW’s response to the needs of tech businesses, the dean said. Another example, he said, is the offering of periodic Salesforce training programs by UNCW’s Swain Center. Because Salesforce is the foundation on which nCino’s Bank Operating System is built, and Live Oak uses the BOS for its operations, Salesforce knowledge is in demand.

Randall Johnson, executive director of the N.C. Biotechnology Center’s Southeastern Office, witnessed the growth of Wilmington’s CRO cluster and believes Wilmington is poised to become a fintech hub.

“There’s a great foundation there already, with Live Oak and nCino growing organically,” he said. “There are passionate entrepreneurs and investors here who are willing to take on these challenges.”

With the addition of more ventures, Johnson notes, it becomes easier to attract talent, because if that initial job doesn’t work out, those hires know they will have additional opportunities locally.

“That’s what we have seen in the CRO industry,” he said. Underwood is bullish. “I see no reason why [Wilmington] can’t be Silicon Valley East,” he said. “We’ve got the Triangle and Charleston [South Carolina]. We could be the financial services software version, serving banking, insurance and capital markets. A whole other set of companies could pop up here.”
 
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