Cluster Profile: Oregon Companies Providing Software for Financial Institutions
By Kate McPherron
Introduction: Defining this cluster
The broad category of “financial software” can be defined in two ways: by the function the software is intended to perform, or by the market to which the software is sold. Many companies create software products and services for companies to use in their own accounting, payroll, financial planning, and other financial functions. However, only a few companies create software whose functions are designed exclusively for the needs of financial institutions. Oregon reflects this breakdown, with dozens of companies in the broad, vague “financial software” category, but only a few software companies serving the financial market.
In this article, we will look only at the issues faced by companies who create and market software to banks, credit unions, investment companies, mortgage brokers, and other financial institutions. This article will look at the two publicly traded companies in this cluster, Corillian Corporation and Harland Financial Solutions, as well as one small private company that has grown significantly serving banks – SwiftView, Inc.
Overview of the Oregon companies serving financial institutions
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Corillian Corporation
Corillian is a leader in online banking, bill payment and fraud prevention applications for the financial services industry. With 28 of the top 100 US banks and 20 of the top 100 US credit unions as customers, Corillian serves over 25 percent of the online banking community. In 2005, Corillian acquired InteliData Technologies Corporation and qbt Systems, which significantly enhanced Corillian's capabilities in the online financial services industry. Corillian is headquartered in Hillsboro, Oregon and employs approximately 270 professionals. The company was founded in 1997 and has been publicly traded on the NASDAQ under CORI since April 2000.
Corillian provides a flexible, scalable and secure set of online banking applications across multiple lines of business, e.g., Consumer Banking, Small Business Banking, Wealth Management, Credit Card Management, and Corporate Cash Management, as well as enterprise-wide solutions (including Fraud Detection, Payments Warehouse, Alerts, eStatements, and OFX). Corillian's fraud prevention solutions use Preemptive Forensics™ to protect websites from phishers, hackers, and fraudsters. Corillian's strong authentication solution provides a low-cost solution for multi-factor authentication while maintaining high user satisfaction.
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SwiftView, Inc.
Founded in 1985, privately held SwiftView, Inc. develops software and services that help companies capture, view, print, deliver, access, and archive electronic documents and drawings. Addressing the growing demand for Web-based services and the particular need for secure document transmission in the financial services industry, SwiftView rolled out SwiftSend LoanDocs® in 2001. LoanDocs harnesses the Internet to deliver loan-closing packages and other sensitive documents and files from desktop to desktop. SwiftSend helps lenders eliminate the inefficiencies and extra handling associated with unnecessary paper in their workflows. SwiftSend Services securely delivers document sets and disclosures through the Web for hundreds of lenders. SwiftSend counts Harland, and its INTERLINQ mortgage loan origination and servicing software, among its partners.
SwiftView has been named one of Oregon’s fastest-growing technology companies for the past five years in a row, in no small part due to SwiftSend. The company’s focus on the mortgage banking market changed SwiftView from a generic software company into one dominated by its service to the banking industry. In 2001, SwiftView revenues were just over $2 million, growing moderately. SwiftSend was launched in 2001 and in 2005 the company’s revenues and number of employees had nearly quadrupled.
The effects of technology apparent in companies’ histories
The market for software and services for banking and financial institutions has grown dramatically as a result of increasing technology adoption both in the institutions and in their customers. In general, the companies and their products as a whole succeeded because they took advantage of technological forces. All three companies broadly enjoyed the move in banks and finance from paper to electronic forms and subsequent online transactions.
Of the three companies, only Corillian set out to serve the financial market exclusively. The history of Harland’s Portland office (CFI) begins with a broader range of markets: commercial, financial, and insurance; only later did the company narrow its target to financials only. SwiftView’s software tools are horizontal; the company entered the financial industry when it designed features of the SwiftSend ASP service to dovetail with the needs of a growing mortgage market.
Harland/CFI goes back to the 70s; evolution parallels that of the PC, Laser Printer
CFI Management Services was founded in 1978 by Herb Wegner, who had a long history in banking starting with Marine Midland. He conceived a company that would act as a head office for community banks, offering products and services to their members. With the rewrite of the Truth in Lending laws, CFI’s first product was a package of printed forms for lending and operations and compliance; the company also did bank audits and call-in services for filling out the forms. The transition from a forms company to a software company directly paralleled the evolution of hardware.
“In 1983, banks began requesting automation for impact printers,” says Robert T. Jett, president of Prescient Software, and an early CFI executive. “I joined CFI in 1984, about when the IBM PC was gaining popularity. Our original program was for completing preprinted forms with carbons in them on impact printers. When the laser printer came out and was affordable, we looked at recreating our forms electronically to print on blank paper. This was a big change. In the impact printing days, when a legal change came out, we had to reprint forms and change the software to meet forms. Suddenly with the laser printer, we were free of that expensive, tedious task. We were in the middle of a paradigm shift in how people would do documents.”
“The marriage of blank paper with computers that were doubling in capability and halving in cost every year enabled CFI to proceed rapidly,” says Jett. “The next big breakthrough came when I realized we could take all the legal knowledge and organize it to selectively determine what we were going to print. Not to create forms, but to build a form around the transaction. Our new program created dynamic, intelligent forms that were based on a series of questions during a loan transaction. This was the first version of Laser Pro.” Laser Pro is Harland Financial Solutions’ key lending product.
Jett likens the early company to Microsoft, in relying on no one else. “We’ve always developed our own tools and were not dependent on outside tools like many of our competitors, some of whom required that you own a MS Word license to use their system. That’s at the core of our success: maintaining and controlling our own tools. This enabled us to keep in step with our own releases. When our customers got an updated version, they didn’t need to buy anything else. This enabled us to go forward at a rapid pace.”
In the dot-com 90s; fast connections drive market for online banking and Corillian
“Corillian was started locally by Ted Spooner, then CFO at First Technology Credit Union,” says Steve Shaw, director of marketing for Corillian Corporation. “Because it had a lot of tech-savvy members, FTCU wanted to provide them with remote access to their finances online. In the mid-90s, Ted and a team of engineers developed a PC banking product which was widely successful. Ted felt they could deliver this solution to other financial institutions.
In 1996, Ted and a group of original founders took the technology from FTCU and founded Interactive Solutions Corporation. They started off well and were soon bought out by CheckFree, a large electronic bill payment provider (EBPP). CheckFree found, however, that the online banking solution was preventing them from selling their core EBPP solution to other online banking companies. So, Ted bought back the company, and Corillian Corporation was founded in May 1997.
In the late 90s, the adoption of the Internet took off like crazy. Financial institutions were trying to find ways to take advantage of that technology, to get online banking, electronic transactions, and other innovative services going. Online banking was both a competitive advantage as well as a more efficient way to serve customers for the financial institutions.
Over the past few years, there’s been a broader adoption of broadband technology, so access to the Internet is quicker and it’s easier for the broader market to do things online, including online banking. Now, it’s not just early adopters, but a vast majority of a bank’s customers who are online. This forces banks to be creative with their online offerings and that’s where Corillian has been at the forefront, allowing financial institutions to offer more online services to more customers.
However, the financial industry by nature is very conservative. They’re heavily regulated, so they take a methodical approach to adopting new technologies. Ted purposefully focused on the needs of the large institutions, because there were companies like CFI/Harland that were effectively serving the small to mid-sized market with hosted services and ASP options, but he knew that large banks wanted to own the systems themselves, and set about building a highly scalable, robust solution designed for the needs of large banks.
As the Internet usage, and online banking in particular, among consumers continued to boom, Corillian rapidly gained market share because some of the systems that the banks built themselves, or those they had purchased from other providers, did not scale well to meet the increased demand.
Corillian continued to gain a lot of financial institutions as customers and eventually went public in 2000. With this history as a foundation, Corillian now has over 150 customers, including some of the largest banks and credit unions in the country, and more than 25 million people use Corillian software at their respective financial institution to bank online.
We learned a lot during this growth phase, and now to continue that growth, we realized we would have to productize our knowledge and “best practices” to serve the needs for a broader range of financial institutions. We had historically focused on large banks, creating custom solutions for their retail customers. Now, we have built products for small businesses, corporations, and expanded our bill payment and online security solution. We are now giving mid-sized and smaller financial institutions access to our expertise and features – functions that previously only large banks had access to.
SwiftView founded in the 80s; Internet drives electronic document delivery service
SwiftView’s story is one of moving from broad horizontal markets to one specific one that was made possible by following its bank customers’ example. In 1985, the company started by doing custom software, which became the foundation for its PCL viewing product released in the early ’90s. “SwiftView has customers in every imaginable industry, so we’ve always been curious about how companies use this fairly generic product,” says Donna Schultz, Vice President of Sales and Marketing for SwiftView and formerly with Harland and CFI ProServices.
“Around 1999, we found ourselves helping the IT departments of several big banks like Bank of America as they began to create systems to transmit mortgage documents electronically. Since many banks and mortgage brokers don’t have the benefit of a big IT department to do the development, we thought, ‘why don’t we do it for them?’ That was the foundation of SwiftSend. Now we have hundreds of lenders who ‘save a day on closing’ by transmitting 80-plus page loan-closing documents electronically, instead of printing paper, and using couriers or overnight services.”
Financial market influences drive companies’ success
In the last decade, banking has seen dramatic changes with several major regulatory and procedural developments, including electronic check processing, online banking, online loan processing, electronic signatures, and various privacy-driven initiatives, including Sarbanes-Oxley. Each of the three companies has had their success propelled by one of more of these financial market forces.
Market compels Harland acquisitions to create larger, more diverse provider faster
In its very early days, CFI got boosts when endorsed by California Bankers, and later, in the mid-’80s, by the ABA. These endorsement required CFI to convert first forms, and later software, to meet the needs of all 50 states. In these early days, the company built their solution. But by the time Harland had acquired Concentrex, the technology company had already recognized that in order to achieve its aggressive growth strategy, it needed to grow through acquisition rather than simply relying on internal development. As J.R. Clemons, Executive Vice President and General Manager of Lending Solutions in Harland Financial Solutions’ Portland office explains, “John H. Harland’s strategy for the bulk of its 87 years has been printing, going back to printing emergency scrip for the Atlanta Clearinghouse Banks in the 1930s during the Great Depression. In the last decade, developments like electronic home banking and credit cards have challenged that strategy, because people and companies don’t need as many checks as before. That forced Harland to ask, ‘what else do those organizations need? and ‘what directions are compatible with what we can do?’ In 1998, Tim Tuff, Harland’s newly appointed CEO, saw the value in technology; he understood that we could continue to grow a good company with a good reputation by moving in the direction our customers were going. That was one of the things that started many bank-oriented companies’ acquisitions.”
In the last several years, requirements instituted by Sarbanes-Oxley regulations have pushed consolidation, says Clemons. “These regulations force banks to consider the risks with regard to their vendors. Every year, we get due diligence questionnaires to fill out regarding our viability as a vendor. Having 200 vendors to manage now becomes quite a burden for a bank, relative to having only 20 or 30 vendors. So, Sarbanes-Oxley is actually putting pressure on banks to choose bigger vendors with diverse, integrated solutions.”
A proactive stance on privacy/security helped Corillian grow
“The recent phishing and online security threats have been on the radar for some time,” says Shaw. “Now they’re coming into the spotlight. Financial institutions have been looking at ways of combating online fraud, but now the federal government has come in to give them a little push. Late last year, Federal Financial Institutions Examination Council, or FFIEC, issued a guidance letter titled, “Authentication in an online banking environment,” specifying that all financial institutions must have an additional layer of online authentication beyond the usual user name and password.
Corillian had been proactive in developing technology for this. We realized it was coming long before it was legislated. This forethought has garnered a lot of interest from our customers and prospects. Other companies in our industry were not so proactive, and are now force to buy or partner with companies to meet this need. We had a head start, so we’re doing it internally, and that has had a positive effect on Corillian's business.”
Low interest rates paved the path for SwiftSend’s rapid adoption
Donna Schultz explains how low interest rates helped SwiftSend take off in the mortgage market. “Although we knew mortgage loan processing was a key market, we still went out to market with a generic document delivery solution and, just like at CFI, we thought lawyers and businesspeople would find it useful. But not everyone had a need for very secure, accurate, printable anywhere electronic documents that preserved legal and letter page sizes, and could handle very large files – just a few of our advantages over Adobe PDF, by the way. SwiftSend is a unique ASP service available to deliver documents at a fraction of the cost of a courier or overnight at exactly the time mortgage loan rates dropped to their lowest in 40-some years. We couldn’t have asked for better market conditions – suddenly there’s a housing and refinancing boom, and mortgage companies sprouted up. The competition led many to ask how they could cut costs and there we were.”
“Once we narrowed our focus on mortgage companies and built a sales and support organization to target that market, we gained a substantial market presence. In the meantime, PDF as an electronic document format has taken off in the generic markets, and that may ultimately drive customers back to our software products, and maybe create a market outside of when they find limitations.”
Why In Oregon?
Everyone agrees that the location of software companies serving financial institutions is purely happenstance; it has nothing to do with the location of banks. However, everyone also agrees that Oregon has everything to do with why they’re staying put.
“Oregon is a great place to do software in general, not necessarily just software for finance. With a great technical infrastructure, top-notch companies to support it, and a plentiful stream of qualified tech job seekers, it doesn’t matter where you are – just tack on a regional sales network,” says Schultz, “SwiftSend was lucky to be able to bring in well-trained junior people, like technical customer supporters, from the area where other companies give them the start, and we’ve also had no trouble finding more experienced senior staff from the local area.”
“We were founded in Oregon because of FTCU, but Oregon and Portland have been great for us,” says Shaw. “We have access to groups and high-tech firms like Intel from which we gain a lot of expertise with the engineers here. Also, as a key strategic partner with Microsoft, we’re just down the road – being near helps us to optimize our products for Windows environments. As we expand our target markets, and as we take advantage of other opportunities, more financial institutions are looking to partner with us. As we are successful, we anticipate we’ll grow, and the Portland community will grow with us. Chris Brooks, our CTO, and his team of engineers and developers are very active working with local organizations’ educational institutions to bring in interns and contractors to help with our business and to share best practices in software development.”
What isn’t happenstance is that quality software companies formed here. Clemons puts it simply: “One of the characteristics we Westerners have is independence, and I think this characteristic also made them latch on to the new thing: software. That meant that there was tech expertise early on in Oregon. Why Harland Financial Solutions ended up as the strongest of probably only three vendors in the US in the marketplace we’re in is mostly a factor of the talent - general technical expertise and specific legal talent like that possessed by people like Bob Jett and Matt Chapman. You have to remember, this was developed 20 years ago, when software was a really new thing. These guys did DOS coding. They had the vision to see the value of printers, and also had the software and legal knowledge. Ultimately, this generated a great company.
“Portland has long had a tremendous workforce that for a long time was substantially underpaid compared to the rest of the country,” says Jett. “This made it a great place to do business. We could compete, while still having capable, competent people”
Biographies
J.R. Clemons, executive vice president, general manager, lending solutions, Harland Financial Solutions
Clemons has overall responsibility for Lending product development and operations. With experience in product development, sales, legal and intellectual property issues as well as software operations, Clemons has worked in both the national and international arenas for publicly traded and privately held companies. He has more than 20 years of experience in working with financial institutions of all sizes. Clemons earned a Bachelor of Arts in Economics from Washington State University and his Doctorate of Jurisprudence from Gonzaga University. He is a member of the American Bar Association and the Washington State Bar.
Scott Hansen, vice president, business development & strategic marketing, Harland Financial Solutions
Hansen’s business development and marketing responsibilities revolve around demonstrating and promoting the value of the Harland Financial Solutions family of products and services. Prior to this, Scott Hansen spent 13 years focused on Harland's Decision Support product line, which includes the Touché® Analyzer™ (formerly Max$ell) system. Hansen started his career in the financial industry at a $2 billion savings institution, where he was one of the earliest users of the Touché Analyzer system.
Robert T. Jett, president, Prescient Software
Bob Jett has over 30 years of executive and legal experience in a variety of industries. As a lawyer, he has performed in key positions for a Fortune 500 company and several financial institutions. In 1984, Bob managed CFI ProServices, a small forms and compliance company in Portland, Oregon. In the following 17 years, Bob with others helped build CFI into a public company with over 1,100 employees. Under his leadership as Executive Vice President, CFI grew to become one of the dominant providers of transactional PC software to the financial services industry, including the company's flagship software product, Laser Pro™, which currently is in use in approximately 3,500 financial institutions.
In 2000, Bob left to start Wildfire Network, Inc. – a technology and marketing company geared toward delivering financial services and products through the Internet. In 2002, he founded Prescient Software and eDocs-Express. Bob holds a Bachelor of Arts degree from the University of Nebraska (1966) and a Doctorate of Jurisprudence from Willamette University College of Law (1969). He also attended Brown University in 1962 and 1963.
Donna Schultz, vice president, sales and marketing, SwiftView, Inc.
Donna Schultz joined SwiftView in 2002 with more than 15 years of experience developing and implementing successful national marketing campaigns in a variety of sectors, including software and financial services. She is responsible for managing all sales and marketing functions of SwiftView and its products. Prior to joining the company, Donna was Vice President of Marketing and Product Management for Harland Financial Solutions, where she managed integration through two corporate acquisitions. She began her career as a market researcher and over the years has held marketing Vice President and Assistant Vice President positions at such companies as Sonus, USA and Standard Insurance Company. Donna holds an MBA from the University of Portland and a bachelor‘s degree from Western Michigan University.
Steve Shaw, director of marketing, Corillian Corporation
Shaw is responsible for Corillian’s outbound marketing strategy, including corporate communications, events, and promotions management. Prior to this role, Shaw was Corporate Communications Manager, in charge of media, investor, and analyst relations. Before joining Corillian, Shaw was an Account Executive at The Weber Group (now Weber Shandwick International), a leading high-tech public relations firm, where he managed the public relations strategies for various high-tech firms. Prior to The Weber Group, Shaw worked as a PR intern at Novell, Inc. Shaw has a Bachelor of Arts degree in communications from Brigham Young University.
About the author
Kate McPherron, a technology evangelist, has helped technology and industrial firms manage and market their products and services for the past 20 years. She can be reached at klm54@cornell.edu.
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