Business accelerator allows nbkc to differentiate

When nbkc bank entered the fintech marketplace in 2018 with Fountain City Fintech, an accelerator for fintech startups, it began not with action, but by listening. Bankers talked with more than 150 startups in the first five to six months of 2018, said Zach Anderson Pettet, managing director of Fountain City Fintech.

“We quickly figured out access to a bank that can move quickly, be nimble, be creative and actually understand where the entrepreneur and the founder are coming from and what they’re going through day to day as they’re building their company, is a huge, huge differentiator,” said Anderson Pettet, who joined nbkc in early 2018.

Their strategy was to determine how nbkc could leverage internal capabilities and technologies to help fintech companies and — at the same time — how those fintech companies could benefit nbkc by having unique access to customers and unique marketing channels.

While listening, they heard many stories about companies that had raised 12 to 18 months of runway and were in partnership conversations with banks but at month 12 still hadn’t received a “yes” or “no.”

“It seemed to us like there was no clear avenue for a lot of early stage fintech startups to really develop bank partnerships in a time frame that allowed them to actually build a business,” Anderson Pettet said.  

Fountain City Fintech is based in Kansas City, Mo., the “City of Fountains.” It functions as a 75-day fintech partnership accelerator. Partnership details are worked out between the accelerator and the fintech, then the focus turns to execution, making sure the startup is compliant, has a scalable culture and clear communication channels.

Zach Anderson Pettet

“And we also do all the things that most accelerators do,” Anderson Pettet said. “We bring in investors. We bring in advisors, mentors, make sure that the companies are really kind of ready to go out after that 75 days and just grow and not have to worry about building that infrastructure anymore.”

Fountain City Fintech worked with six startups in 2018. It invested $50,000 in four of them. In 2019, it expects to work with five or six companies, two or three of those as part of an entrepreneur-in-residence program. The others will be traditional fintechs.

What nbkc looks for from potential participants is whether they fit the bank’s three business channels: mortgages, small business lending and deposits, and consumer lending and deposits.

The entrepreneur-in-residence program will involve taking some internal ideas/problems and open them up to entrepreneurs to build a solution into a startup.

The hope is “at the end of the day, we got one of our problems solved. We created a new company and hopefully it solves some more problems for other community banks,” Anderson Pettet said. “There are a lot of different ways we benefit.”

In the 2018 class was Digs, an app for first-time homebuyers with a savings and education component. CEO Pat McLoughlin founded the company with Chad Johnson. Digs wasn’t specifically looking for an accelerator, McLoughlin said, but a banking partner to hold money users were saving for a mortgage in an FDIC-insured account.

“They treated us more like a customer that they wanted to work with for the long term versus a lot of these other bigger banks that were giving us very high up-front fees and really kind of writing us off,” McLoughlin said. “Because we didn’t have everything built and already live yet, they didn’t really want to talk to us.”

Digs is now helping people save for a home and facilitating it in a way that they can learn about the banking process, McLoughlin said.

“The executive team was very much involved in the entire process, which was refreshing to see,” McLoughlin said. “Their partnership is invaluable to our company right now.”