Financial technology startups dot the landscape like grain silos mark the surrounding farmland. In Silicon Prairie, mobile payments, online banking and core banking services are the new cash crop.

The geographic triangle drawn around Omaha, Neb., Des Moines, Iowa, and Kansas City, Mo., (one of several regions to share the Silicon Prairie name) has been a technology powerhouse for decades. But in the past five years that trend has accelerated, with numerous new companies taking root there to help retail banks keep ahead of technology trends, even amid the recession.

Rather than act as competitors, these companies offer complementary services and feed off one another's expertise. The younger companies in this region attribute much of their success to the advice and mentorship they received from their more experienced predecessors.

"Over the years, as people have gotten their strength in the payments business, they went off and helped other companies grow," says Bill Fisher, the former chief executive of ACI Worldwide (ACIW), a New York payments company that was originally in Omaha.

Fisher runs an angel investment firm, Treetop Ventures, that has placed $12 million with Silicon Prairie startups. He sits on the boards of Lodo Software and Financial Transmission Network, both of which are based in Omaha. Lodo makes personal financial management software, and FTNI develops and manages bank software that incorporates check scanning, ID verification and automated clearing house and card processing.

Other prominent Silicon Prairie fin-tech companies include Dwolla, a Des Moines e-commerce social payments provider founded in 2008; Sentinel Financial Services, an Omaha online escrow platform provider founded last year; T8 Webware, a Cedar Falls, Iowa, bank website design and software company founded in 2008; and SmartyPig, a Des Moines online savings and social networking company also founded in 2008.

And in capital markets, the third-largest operator of stock exchanges in America is now BATS Global Markets, which got started in 2005 in a storefront in North Kansas City and then moved to a Kansas City strip mall.

Ben Milne, the founder and chief executive of Dwolla, says the mentorship of others kept him motivated when he was starting his company. Suku Radia, the CEO of Bankers Trust of Des Moines, convinced Milne to change his business model from one that originally resembled PayPal. Radia also put Milne in touch with a lawyer who was a former regulator. Milne didn't hire the lawyer, but the social connection helped Dwolla.

"This old guard was totally focused on how we do more with relationships so we don't have to spend more money and [to] create value," Milne says. Simply adhering to their advice "has worked out pretty well," he says. Dwolla's most recent mark of success is the support of the actor, Iowa native and tech investor Ashton Kutcher, who confirmed his investment in Dwolla this week.

Older companies trace their roots to the region or have offices there today. WebEquity, an Omaha commercial lending technology company, was founded in 1985. First Data Resources, which later became First Data Corp., a unit of Kohlberg Kravis Roberts & Co., and moved to Atlanta, was founded in Omaha in 1971. International Business Machines, TD Ameritrade and PayPal have offices in Omaha as well. First National Bank of Omaha is among the 10 largest payment processors in the U.S.

The underpinnings of Silicon Prairie go back to the 1950s when the U.S. Air Force relocated the Strategic Air Command south of Omaha. With it, the Air Force brought the infrastructure that eventually attracted technology specialists.
The region's technology experts have a "farming mentality that spills over into everything, where you leverage the asset instead of trying to replicate something that someone else is doing," says Dusty Reynolds, the Greater Omaha Chamber of Commerce's director of entrepreneurship and innovation.

New opportunities arose for technology vendors in the early 2000s, when many banks began allowing outsourcers to handle some of their technology operations. The financial crisis acted as a further catalyst.

The education system in the region has been a boon for these businesses as well.

Sixteen members of T8 Webware's 59-person staff are college students from the local University of Northern Iowa, says founder Wade Arnold.

"Banking is one of these really hard things, because you can't just hire somebody … we find it easier to just get people early and get them into the ecosystem where they get a year or two of an internship," Arnold says. "By the time they understand banking and understand how money is moved throughout the U.S.," T8 Webware can hire them, he says.

Companies like Fiserv and Microsoft are working with the University of Nebraska-Lincoln's Jeffrey S. Raikes School of Computer Science and Management on projects tied to mobile banking. "The main idea behind it is you have these kids in their early 20s, and they are not only the best programmers around, but as millennials they really get the way software should be [created] for ease of use and engagement," says David Keck, the school's director.

Silicon Prairie's sense of community is fueled in part by Silicon Prairie News, an online publication founded in 2008 by the salesman Jeff Slobotski and the entrepreneur Dusty Davidson. It hosts two annual conferences, Big Omaha and Thinc Iowa. Silicon Prairie News "allows certain forums to develop," says SmartyPig's president, Scott McCormack. It creates "situations where people can network and talk more."


Bottomline: Even in a slow economy, the Midwest is proving to be a hotbed of tech startup activity.