Early this month, Wilmington-based Apiture landed on PitchBook’s list of North Carolina companies that raised the most in venture capital funding in 2020.
Apiture’s capital raise of $20 million, completed in July, earned a ranking of 14th in the state from PitchBook, an investment data and research company.
The investments came from funds and accounts advised by T. Rowe Price Associates Inc. and Nashville-based Pinnacle Bank, Apiture CEO Chris Babcock said in July.
What is the young company – founded in Wilmington in October 2017 – using that capital for?
The short answer: it’s fueling Apiture’s research and development in pursuit of its mission to ensure that financial institutions have the technology they need to remain viable in a rapidly changing market, according to Chief Operating Officer Chris Cox.
“As technology evolves, we want to allow banks and credit unions to evolve along with the market,” he said Friday.
Apiture offers two platforms: Apiture Xpress and Apiture Open. The company’s smaller and longer-term customers are the primary users of Apiture Xpress. Apiture Open is designed primarily for digital-only banks and larger banks. The company is enhancing both platforms.
Coronavirus-related demand for digital services has underscored the need for robust financial technology, Cox said.
“The COVID-19 pandemic has highlighted the need for technological transformation for financial institutions,” he said. “Bank and credit union customers, now more than ever, need to interact with their financial institution through digital channels from home. That’s not a new dynamic – all businesses have been moving toward optimized digital services for customers. But the banking industry highlighted where there is work to do.”
Many online and digital services at most banks have been available for a while, but stay-at-home orders and in-person restrictions have prompted customers to discover what those features are, and how convenient they can make the banking experience. But increasing customer demand also exposed places where that digital banking experience still is difficult or awkward, according to Cox.
“Looking at the market as a whole, several things are driving financial institutions to change the technology they use: [one is] continually evolving customer expectations as to how they want to interact with businesses through their phone. There are some businesses doing this really well; financial institutions need to keep up.”
One major example is what happened with the PPP loans this year, Cox continued. Banks with state-of-the-art technology, such as Live Oak Bank, were able to respond quickly to an avalanche of loan requests, whereas less nimble banks were playing catch-up.
Continually building their technological capabilities is one way that traditional financial institutions can thrive even as fintech companies that are not banks, such as online mortgage lenders, loan originators and payment systems, offer their services digitally.
“All kinds of companies are looking to nip off little pieces of the banking chain,” Cox said. “They provide small sets of banking services. Some can provide better services than financial institutions themselves because they are focused. This is a dynamic that financial institutions need to learn how to compete with or partner with.”
High-quality technology can also boost the muscle and reach of smaller community banks, according to Cox.
“Through technology, community banks, which traditionally are geographically based, find they are competing against every bank. Through their digital footprint, however, they can attract new customers. It’s easier to go into a new market.”
To compete for customers outside their communities, these banks must offer streamlined digital account opening and must master digital marketing, Cox explained. At the same time, community-focused financial institutions should not lose sight of a fundamental strength: customer service. A customer-centric mindset among a financial institution’s staff is essential to online growth in remote areas.
“Good technology and good customer service have to go together,” he said. “If you are a financial institution, some of your customers will want to engage with you through digital channels all of the time, but all of your customers will want to engage with you through digital channels some of the time. You’ve got to be ready for that. And that’s what we’ve been building toward at Apiture.”