Scott Olmsted, a commercial banker who caters to technology companies for a living, has a unique seat at the crossroads of tech, banking and the overall economy.
Olmsted, the head of Bank of America Merrill Lynch's technology, media and entertainment group, has a sense of how these emerging high-tech firms develop, the range of transactional and capital-raising services they need over time and exactly who their customers are.
Olmsted, 47, worked his way up after joining Bank of America in 2000 as a credit underwriter in the commercial division based in Los Angeles. He previously worked for Walt Disney Co. in a finance role.
To get a handle on rapid changes in tech and commercial banking, his group at B of A has chosen its niches carefully and has a clear idea of what kinds of companies in those categories it wants to bank: those with good venture capital partners, distinct business plans in promising areas such as cybersecurity and content creation, and other telltale characteristics.
Olmsted talked with American Banker recently about his group's priorities as well as notable technology disruptors and the spread of tech to traditionally nontech sectors. The following transcript was edited for length and clarity.
What role do you play in helping technology companies?
SCOTT OLMSTED: Bank of America Merrill Lynch customizes services and offerings for clients as they grow and change, based on their needs. Early on, we offer treasury services to help companies interact with their customers in a seamless way that is scalable with the accelerated growth of their business. For example, products such as merchant processing, purchasing cards and standby letters of credit to secure office space are provided in the earlier stage of a company's life cycle. As the company's growth continues to accelerate, the bank can assist with entering the international markets including managing currency risk, capital management and specific country requirements with in-country resources located around the world. Lastly, we are a capital provider to companies – either our own capital or institutionally raised capital to help technology companies meet their strategic goals.
What are some characteristics of a technology company that would be appealing for a bank to work with?
There are success characteristics we have seen that are important for a technology company. Notably, the venture capital firm or firms backing the company, the management team running the company and the board who oversees the company. Experienced teams are more likely to anticipate change, quickly identify trends and have the ability to adapt to the market change.
In addition, Bank of America Merrill Lynch seeks products or companies that are differentiated from what already exists in the market. In fact, we have organized our team to specialize in the technology, media, and entertainment industries to stay on top of industry dynamics and be at the forefront of the industry trends.
What are your thoughts on the overall state of the technology industry?
We continue to see growth in the technology industry across many of its subsectors. Venture capital funding is still active in finding opportunities to invest in companies across all life-cycle stages. More importantly, innovation in technology is playing a major role in industries outside of technology, who are relying on technology to make their companies more efficient and easier to interact with their customers, all in a safe environment.
What are examples of some technology disruptors, or recent technology innovations, that have had a significant impact on the technology industry?
An influx of data in our daily lives highlights the importance of collecting and utilizing customer data for companies. On the consumer front, every smartphone, tablet and computer we use collects information that can share insights into behaviors. Companies now use artificial intelligence to leverage data to personalize their interaction with customers to make it a more customized experience. Smart technologies such as the Amazon Echo and other personal assistants also collect data based on your habits and interactions and use AI to further personalize your experience.
Another major theme is the growing cybersecurity threats and the impact of mobile devices. As more data becomes available, hackers are looking for ways to steal and manipulate it, so data protection is a significant theme. In regards to mobile, Bank of America is working on ways to interact with consumers and clients to enhance their mobile experience. “Mobile First” is a trend we've seen among younger generations, where consumers prefer using mobile devices over desktops. Companies and marketers are using this to create an omnipresent experience to reach audiences on their preferred media.
Lastly, we are seeing the continued convergence of technology and content as a growing trend in content consumption. From user-generated to professionally produced, content creation and the way it is consumed is having an impact on the media industry.
What else can you share that would give people a better view of the industry?
Everyone has their eye on technology, especially nontechnology companies. More and more in the M&A world, we're seeing nontechnology companies buying technology companies, which highlights the need for technology in client service in business. Business-to-business and business-to-consumer companies are looking to leverage technology to be more user-friendly. For example, innovation labs are a growing trend in Silicon Valley, especially among automakers because of the heightened interest in the driverless car. Robotics is also a disruptor that is leading companies who traditionally may not have been interested in tech to consider the technology space and better understand the impact technology may have on their business.