Apps for All

Helping community banks with their technology needs? In Tom Shen's world, there's always an app for that.

Shen is a serial entrepreneur whose latest start-up, Malauzai Software in Austin, Texas, is reaching dozens of banks and thousands of their customers through the programs it designs for small banks. Like an app for remote-deposit capture. And one that helps fight fraud by letting consumers "turn on" and "turn off" their debit cards with the push of a button. And one that collects data on how customers bank with their phones.

Not long ago, this type of technology would have been available only to large banks with deep pockets. But Shen is among the app developers who are helping to turn this model upside-down, specializing in services that community banks can use and leveling the playing field for them at least a bit.

"We see ourselves as arms dealers for this market," Shen says. "We equip community banks with the latest and greatest technology to enable them to compete."

Shen, who was born and raised in Taiwan and came to the United States when he was 15, has been carving out niches for himself in the financial technology space since 1982.

The first company he founded, Software Dynamics, sold to S1 Corp. in 2001, for millions of dollars plus stock. He also was involved in Digital Insights, the pioneering online banking and payments services firm that sold to Intuit in 2007 for billions of dollars.

Shen's latest company, Malauzai, was funded with $3.5 million in out-of-pocket and investor money. Its aim is similar to what Shen has done before: to apply best-in-class technology specifically to community banks and their customers.

Shen, 55, didn't always have this kind of focus in his life. He was a college dropout working at a Bob's Big Boy restaurant when he stumbled upon a vocational school called the Computer Learning Center. He signed up for some computer programming courses, hoping to pick up some useful skills. Within a few weeks, he was hooked.

Shen has three basic rules for creating apps that can stand out from the millions of them on the market today. First, they must be cool enough that customers actually use the apps after downloading them. Second, customers must be able to manage them easily, and personalize them when possible. Third, banks must be able to measure performance to determine the return on their investment.

These principles form the basis of Malauzai's company tagline: "Cool, smart apps, easily managed and measured."

Banks have been buying into Malauzai's approach, putting the firm on track for 250 percent growth this year, Shen says. Revenue mainly comes from the fees that Malauzai receives from its bank customers: $1 per user per month.

Though most banks don't charge customers for the services Malauzai enables, many say the technology helps strengthen customer satisfaction and loyalty.

Jim Simpson, vice president of information technology at City Bank Texas, told American Banker earlier this year that technology from Malauzai allowing customers to turn their debit cards on and off from a smartphone has been used well in excess of what the Lubbock, Texas, bank had anticipated. "We added it to our lineup of products with the hopes that it would get used ... But lo and behold we are seeing toggles in the thousands," he said.

"We are kind of blown away by it. And our fraud department, they love it, because people are calling in and saying, 'Hey, look, I know this [fraud] is going on in my account, but I have already toggled the card off.'"