Earl C. Johnson had made a decent living in the last 20 years as a government securities dealer for various West Coast banks.
He liked his last job, at First Interstate Bancorp, but his real interest was in refining his budding talent with software, an important skill for working on a busy trading desk.
He is now trying to put that skill to work in a way that helps small banks.
Mr. Johnson said he learned while working for a large company that systems people often do not have time or resources to help traders develop customized analytical programs for various types of securities.
"You have got to be willing to pick up the screwdriver and tweak it yourself," he said. "I just happen to have an aptitude for it."
Stung when the merger bug took out his former employer two years ago, Mr. Johnson struck out on his own to form Deposit Software Inc., Kingston, Wash.
He is about to launch a software package he wrote himself that is designed to give small or regional banks a simple means of access to the $800 billion daily market in repurchase agreements, or repos.
Repos are popular short-term investment vehicles for banks and corporations with excess liquidity. Borrowers get cash that is collateralized typically by government securities. Borrowers repurchase the securities at an agreed-upon price and at a specified time.
Susan Skerritt, a partner at Treasury Strategies Inc., Chicago, said the repo market remains the playing field of large broker-dealers. Banks are shut out unless they can gain access to the market cost-efficiently.
Ms. Skerritt, who has met with Mr. Johnson, said his presumption is that broker-dealers have not developed customer-friendly systems and that they are more oriented toward dealing with counterparties, not the people they are trading for.
"You need to be a trader yourself to deal with them unless you go into a retail brokerage arrangement," she said.
Deposit Software wants to allow a "bank to link to a broker-dealer and offer that kind of an investment alternative to their corporate clients," she said. "I think it is a very interesting idea."
Mr. Johnson said he sees an opportunity to "empower the little guys" through technology.
Many have hired third-party money funds "just to have the product on the shelf." Others have tried with certificates of deposit to prevent customers' defecting to "greener pastures."
Larger banks, put at a disadvantage by burdensome regulatory requirements, have created "fairly roundabout vehicles like sweep accounts in order to accomplish something a broker-dealer can do straight away," Mr. Johnson said. He said regulatory constraints force them to follow "a circuitous route."
Deposit Software has arranged a correspondent relationship with the repo desk of an undisclosed bank in New York.
"By giving banks this technology, it becomes, in essence, their own money fund," Mr. Johnson said. "The customer stays, and so do the profits."
Mr. Johnson said about $500,000 has been invested in the company. He has three "angel" investors, he said, who provide venture capital as well as time, expertise, and other resources.
Deposit Software is about three months away from going into operation with its first banking client, Mr. Johnson said, another name he is not ready to disclose.