FinTech Banking on Arkansas Startups

One such industry thriving in Arkansas’ pro-business climate is the ever-evolving FinTech industry. FinTech, short for financial technology, is driven by innovations that aim to compete with traditional financial methods in the delivery of financial services. FinTech startups also benefit from access to organizations designed to expedite positive results.

One such organizations is the Venture Center, located in downtown Little Rock, which has in recent years aided a number of budding financial technology companies through its VC FinTech Accelerator. In collaboration with FIS, the Arkansas Economic Development Commission, Bear State Bank and a number of participating financial institutions like First Arkansas Bank & Trust, the Venture Center has unleashed upon the FinTech industry dozens of innovative young companies designed to develop financial solutions and enhance the use of existing institutions.

Mortgage Peer Network was among the Venture Center’s first cohort of financial technology startups in 2016. The Argenta-based company offers a software platform that enables the analysis of a bank’s mortgage lending process by providing peer-based scores and real-time customer feedback. By doing so, Mortgage Peer Network has improved the mortgage process and increased customer retention.

“I spent the first 10 years of my career in mortgage banking and transitioned to the technology side in 1999 when I started Precision Risk Management Systems,” says Greg Ellis, founding member of Mortgage Peer Network. “PRMS provides pipeline hedging and business intelligence software for the mortgage industry. In 2016, I decided to start Mortgage Peer Network in conjunction with the Venture Center’s FinTech Accelerator.

According to Ellis, Mortgage Peer Network works with lenders to protect and enhance their online reputation and respond to new compliance requirements regarding consumer complaints as it related to fair lending. The company’s hosted service uses milestone based borrower communication throughout the entire lending process which allows lenders to set proper expectations and receive consumer feedback along the way.

“Our solution directs happy consumers to various social media channels to promote the lender, while unhappy consumer responses are routed to management for immediate intervention,” he says. “Our solution detects potential problems on loans and sends text message alerts to management in an effort to head-off issues. In some cases, our customers have seen consumer complaints decrease by over 90 percent.”

“Unlike other money transfer companies,” he adds, “LumoXchange doesn’t hide the great exchange rates the banks get and then apply a margin or additional fee. Our transparent platform reveals those same exchange rates and gives you the power to pick your own rate and how your beneficiary will be paid, whether by cash pick-up or via bank deposit.”

The idea for LumoXchange came to Sonko after working in his uncle’s money transfer shop while in high school. According to Sonko, before wide access to the internet, users would call to check the rate to find the cheapest way to send money to Gambia. And that is still true today, except individuals are using Google to find the best exchange rates among the existing platforms.

“I observed the complexity, cost and inefficiency of the money transfer business, and I wondered: ‘Why is there not a service that allows customers to find the best rates and send money on the same platform?’,” he says. “Millions of families across the world live and work abroad and send their money and their love back home. I created the LumoXchange platform to solve the age-old problem of sending money across borders.”

“After spending time with Arkansas’ business leaders, we thought Little Rock would be the ideal city to relocate the business,” says Sonko. “We love that Little Rock is a city with a small town feel, where we have access to key decision makers in the areas of banking and finance. The business leaders and elected officials of Little Rock have been tremendously welcoming and supportive of our company and its technology.”

“For example,” he adds, “if you’re due back $1.29, you would get the $1 bill and a Bucket receipt with a QR code for the $0.29. Scan the QR code at your leisure and the $0.29 is loaded into your Bucket account. Once your account reaches $50, you can cash out to a gift card, prepaid card or donate to one of the great charities we have partnered with, such as The Boys and Girls Club.”

The idea for Bucket came to Hwang in 2003, when he was working on a research project in conjunction with the San Francisco branch of the Federal Reserve. The goal, he says, was to attempt to quantify the amount of energy required to maintain the fiat currency instrument within the United States. “I was surprised at my findings that, despite their inferior value, coins represented the dominant cost in the cash instrument,” he says.

“There were too many limitations, including cash registers not even being connected to the internet and smartphone ubiquity not having reached a critical mass. By 2016, I felt that digital POS systems and consumer behavior had evolved and matured to a point where the idea would be doable,” says Hwang. “I partnered up with Daniel Kam, an established entrepreneur who had built several businesses of his own, and in August of 2016, we started the journey of Bucket.”

“Arkansas is a hub of innovation, and we’re lucky that we can be a part of the fun,” says Hwang. “Northwest Arkansas, where I am based and where we are launching Bucket’s pilot, represents a community that is educated, eager for new technologies and welcoming to new people and ideas. It’s a state where startups are welcomed by both the public and private sectors.”

“We do this by empowering the bankers, helping the bank design and use streamlined processes, integrate any and every system we can with the bank and by making sure our solution scales with the bank as they grow…. We do these four main things with a focus on functional areas such as workflow, exceptions management, portfolio management, loan review, special assets, construction management, pipeline and more.”

“It’s the real-world efficiency and empowerment it brings that makes our company unique,” says Ehrhardt. “We’re also keeping to best practices and regulations. In short, being able to not do ‘X’ ever again, and doing ‘Y’ in 10 percent of the time can make a huge difference and allows banks to compete with more agile and leaner FinTech startups or competitors.”

Ehrhardt, who cut thistles in Pea Ridge before his first bank job as a teller, says he hears the skepticism on the other end of the phone when he tells prospective clients that his banking technology company is based in Arkansas. “Even though,” he says, “Arkansas is literally one of the birth places of bank technology – with Systematics – and currently has the FIS VC FinTech Accelerator… I was born and raised here. I want nothing more than to make Arkansas a tech power and grow our economy.”