Online Banking Pioneer Debuts Cloud-Based Loan System

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Chip Mahan, the founder of the first online bank, Security First Network Bank, and current CEO of Live Oak Banking Company in Wilmington, N.C., has helped launch a cloud-based technology company called nCino that has already signed up Live Oak and five other banks.

Live Oak, which Mahan founded in 2007, is the third-largest small business lender in the country, just after Wells Fargo and JPMorgan Chase. The bank started developing software for originating commercial loans and mortgages and other retail loans on Salesforce's platform that went into production at the bank in 2010.

The bank reports that since then, it has experienced a 19 percent increase in loan volume; a 34 percent reduction in loan closing time; a 22 percent increase in staff efficiency; a 17 percent reduction in operating costs; a 22 percent increase in staff efficiency; and a 54 percent reduction in policy exceptions. "As a result, our bank ranked number one in return on assets and return on equity in 2011 [according to Independent Community Bankers Association research]," says said Neil Underwood, president and chief operating officer of Live Oak Bank.

The software side of the business was launched as a separate company backed by the bank. In April, the company signed contracts with five banks: United Texas Bank, Northwest Federal Credit Union, Citizens Bank, Lonestar National Bank and Titan Bank have all signed up for the hosted software.

"There are few good SBA loan origination platforms out there," says Pierre Naude, CEO of nCino, also based in Wilmington. In fact, the company resides in the same building as the bank. "As we prototype software, we walk over to the bank side and get feedback," he says.

nCino executives say their software can be integrated with many core banking products and has already been connected to Jack Henry, Fiserv and FIS products.

Implementation of nCino software takes about 15 days over the course of two or three months, Naude says. The software company learns about the bank client's loan underwriting policies and approval processes, the types of dashboards they could use, and helps create an automated workflow for the bank's loans.

"We go in with a best practices model," Naude says. "We tell people, we're not here to automate your inefficiencies." The company will also scan, index and load existing files into the system.

Next, nCino is working on a residential mortgage offering and retail banking dashboards.

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