A former Google engineer is refreshing the definition of a bank in the digital age.
According to Fortune, only 661 people in the small town of Kansas, Weir, have always been obscure. The creation of the flyswatter in 1906 was probably the only bright spot in the past. Today, Vail Town is a stage for financial technology innovation.
This is due in large part to a former Google engineer, Suresh Ramamurthi, and his wife, Suchitra Padmanabhan, whose wife was a former Wall Street banker who moved to a fund manager in Kansas. Three years after they moved to Kansas, the couple used their savings to buy the 124-year-old CBW Bank, the only financial institution in Weir. In 2008, when the subprime mortgage crisis was most severe, the FDIC ordered CBW Bank to suspend business for reorganization due to insufficient reserves, rapidly expanding non-performing loans, and internal scandals.
This couple not only allowed the bank to re-operate the next year, but also transformed the bank into a place of innovation and change. In the past few years, with the help of this bank’s innovative technology and its versatile state-owned chartered bank, many fintech companies have faltered in the market.
Mr. Ramamurthi said: "Trust is the source of monetary value. If you really want to change the banking system, you must stay in it and not stay outside."
Financial technology companies are launching innovative financial services in the government's strict regulatory areas. FinTech finds that if it works with a bank that has passed the government's approval and can protect the deposits of the people, they don't have to spend time applying for financial licenses.
Andy Schmidt, a consultant of CEB, a financial research and consulting firm, said: “Financial technology companies should focus their efforts on the payment sector. The strategy of cooperation with banks will enable them to enter the market faster and provide personalized services.â€
Ramamurthi, 48, immigrated to Bangladesh and Senna from India in the 1990s. He developed the CBW bank's operation in the bottom of society. He worked as a cashier, learned how to assess local farmers' agricultural loans, and decisively forfeited bad debt collateral.
When he used the company's work experience to examine the bank's back-office operations and technology, he felt a lot of deficiencies. He believes that the majority of bank customers will also feel the same.
He said: "Using Google, you hit the Enter key and you get the answer instantly. The bank can't reach this level."
He began to take over CBW Bank and soon realized that, like other banks, CBW was divided into many rigid frameworks and payment pipelines attached to different accounts, such as debit cards, credit cards, and automated clearing houses.
Mr. Ramamurthi said: All these payment channel information feedbacks are dazzling and cannot be summarized. And do not share information between the various pipelines.
At first, he contacted existing bank technology service providers to modernize the banking infrastructure, but he found that they could not provide the full-fledged service for bank account he wanted.
So he decided to set up the necessary technical tools for himself and established a start-up company called Yantra FinTech that focused on developing software for retail banking infrastructure. A few years later, he created a new platform that could adapt to older banking devices, allowing customers to open up the split payment channels. This can make account behavior more transparent, but also allows CBW banks to collect transfer information in real time.
Through these activities, Ramamurthi admitted that he also realized the importance of bank supervision. This means that banks must act in accordance with regulatory regulations, including knowing the status of your customers, monitoring suspicious financial behaviors, and including risks in different situations such as online banking, APP, and even sub-branches. As a result, Ramamurthi returned to the school to receive training as a bank compliance officer.
Ramamurthi said: "I want to better face the suspicions of government regulators on our banking system, prepare them for possible problems, and tell them how our system automatically solves many problems."
Yantra, with 35 employees, and CBW Bank, with 25 employees, provide financial technology makers with more modern and faster backbone technologies that enable them to develop their own products and comply with all relevant government regulations.
Julie Conroy, director of research and development at a bank technology consulting company at Aite Group, said: “What Mr. Ramamurthi has done is to modernize the bank’s traditional technology system.†These technologies include faster processing power, machine learning, and other companies that Google has proposed, rather than the traditional commercial bank.
Omney, based in Mountain View, Calif., who developed the Immediate Payment Program in 2012, was one of the first technology finance companies to partner with CBW and Yantra. These companies work together to reconstruct the debit card process and increase the traditional consumer account deductions from near real-time to real real-time deductions.
Rodney Robinson, chairman and founder of Omney, said: "We went to the CBW Bank at that time to see if they could open up the debit system to us to complete the payment. This was an untested new technology. Of all banks, only CBW Bank is willing to help us with this technological change."
Today, Omney is providing real-time payment services for many large companies. Google uses this service for Google Wallet. Buffett’s Berkshire Hathaway uses this service to cover some travel insurance claims. In 2014, MasterCard acquired Omney Company at a non-public price.
Another example is Moven, a mobile banking app that allows customers to remotely access all bank accounts and integrate all bank transactions, including deposits and withdrawals, payment by credit or debit card, and account access. After years of unsuccessful efforts to obtain a bank license, they decided to cooperate with CBW in 2012.
Moven's chairman Alex Sion said: "Financial technology companies can't start business in garages with two rags. You have to operate in the financial ecosystem and you have to find a bank as a partner."
The strategy of cooperation between CBW and financial startup companies has been successful today. Today, the bank’s assets have reached 20 million U.S. dollars and its assets in 2009 were 7 million U.S. dollars.
Moreover, according to its report to the Federal Financial Institutions Review Committee, its operating income other than interest income includes various service fees for start-up companies, approaching two million US dollars. In 2009, this figure was 5,000 U.S. dollars.
Ramamurthi said: "We did not expand our loan business, but the payment business is global." Global payment business is growing. He is testing a library of 500 application program interfaces (APIs). He believes that these APIs can allow any startup or related traditional bank to establish a digital bank within six months, and the traditional method still takes more than two years. According to Ramamurthi, these have entered the public testing phase and these are just the beginning of the grand blueprint.
Ramamurthi said: "The work I have done to upgrade the infrastructure is a bank must do. The more complete the infrastructure, the more businesses the bank can do."