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Felecia Hancock

Arkansas Business Article about BankLabs

Arkansas Business: ‘Friendly’ Fintech BankLabs Helps With Lending

By | Article

‘Friendly’ Fintech BankLabs Helps With Lending

by Sarah Campbell-Miller on July 26th 2021

 

BankLabs of Little Rock will graduate from this year’s FIS Fintech Accelerator in August as it adds employees and works on a new software product designed to automate agricultural lending for banks.

BankLabs was the only Arkansas company selected from 148 applicants across 31 countries to participate in the program, which is sponsored by financial technology giant FIS of Jacksonville, Florida, and the state of Arkansas and hosted by the Venture Center of Little Rock.

“We like to call ourselves friendly fintech. The reason we use that term is we’re helping banks around the country, regardless of size, defend against the disruptive fintechs,” Matt Johnner, BankLabs president and co-founder, told Arkansas Business. “We’re the friendly fintech that helps the banks deploy additional lending solutions, including some more forward-thinking things, like allowing different companies to make loans to each other, but still benefiting the bank.”

The company was founded in 2016 and employs about 30 people. It’s hiring another 16 over the next year, he said. “We are really at a point of acceleration, or a tipping point. We’ve signed over 130 banks in the first five years. We’ve now built a great foundation,” Johnner said. “And so now it’s time to go to the next level. We’d like to double our revenue in this coming year. And then double the year after that; we just closed our first outside funding round with some great individual investors.”

He declined to disclose the company’s annual revenue, but said it raised more than the $3 million it sought from the funding round. BankLabs isn’t profitable yet. It “could be profitable in less than one year, but that would sacrifice growth,” Johnner said. He added that he was not building the company to sell it.

Johnner said BankLabs aims to be a company that has a multi-product portfolio heavily focused on commercial lending and is profitable in the long run. “We will continue to evaluate opportunities. We have had some folks try to acquire us already, and we just determined it wasn’t the right time,” he said.

For now, BankLabs has two main products, Construct and Participate. The company’s new agricultural lending product is unnamed and in the “ideation phase,” Johnner said.

Construct is software that automates construction lending for lenders to make that process — traditionally accomplished with spreadsheets and other paper documents — more profitable and efficient. The automation also reduces risk by providing real-time alerts to lenders.

Participate is software that automates lending between lenders. For example, a small bank that has a loan limit of $6 million could use it to lend $15 million to a borrower, with the additional $9 million participation coming from a partner bank, Johnner said. The software “automates the whole digital lending flow and has a marketplace component to it, to find new partners if that bank doesn’t have enough partners already,” he said.

BankLabs’s goals include signing more banks up for its products and building out the network effect of Participate. “So, if you’re a bank in Arkansas and you have, let’s say, 10 or 15 loan participations on your balance sheet, you might also have 10 unique banks that have bought one or more of those from you,” Johnner said. “And so what we do is we try to leverage that network effect, … give free access to [the] 10 downstream banks. And then we lovingly land and expand and try to upsell them.”

In addition, BankLabs touts experience in banking and technology from both Johnner and its co-founder, Chairman and CEO Mike Montgomery.

Johnner was an oilfield engineer before he joined Perot Systems Corp., which is now Dell Information Services, in 1994. After that, he worked for numerous technology companies.

Johnner said Montgomery is a third-generation banker who has invested in more than 20 community banks around the country and serves on the board of Southern Bancorp in Arkadelphia. Montgomery was also an executive at Systematics Inc., the Arkansas-based predecessor of FIS. Johnner called his partner’s past experience “fintech 1.0.”

“We’re trying to help Arkansas expand its economy and bring high-paying jobs back to Arkansas, through what we would call fintech 2.0,” he said. “This is a great time of consolidation for banks. It’s a great threat to banks that don’t innovate. So we seek out and welcome banks that are looking for digital innovation and defense against the bad guys.”

 

 

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Arkansas Money and Politics features BankLabs

Arkansas Money and Politics: BankLabs Aiming to Further Disrupt Commercial Lending Space

By | Article

“Matt Johnner, BankLabs Aiming to Further Disrupt Commercial Lending Space”

in Arkansas Money and Politics,

Matt Johnner is no stranger to taking on challenges. He worked as a drilling fluid engineer in the oil and gas industry in such far-flung locales as Nigeria, Yemen and Dubai before entering the business world as a top-level software developer for the famous Texas billionaire H. Ross Perot at Perot Systems.

From there, the 50-year-old New York native gained a vast amount of experience by leapfrogging across several startup and small-stage companies, eventually working for Texas tech giant Morton Myerson. So, when he got the call from Mike Montgomery to join the financing company Radius Group in 2013, he jumped at the chance to start a journey that led to the founding of BankLabs in 2016, where he serves as president to this day.

BankLabs is a multi-product company that helps banks compete with “disruptive fintechs” and large international banks by automating lending. Their products help banks work on loans together when they’re too large for just one bank to handle, thus minimizing the concentration risk while replacing the inefficient, traditional process for handling loans.

The impressive results include being picked as one of just 10 companies from across the United States and 29 other countries to be part of the 2021 FIS Fintech Accelerator at The Venture Center in Little Rock. Johnner hopes participation in the accelerator will help his team grow Banklab’s Participate program.

“We started with a product called Construct, which automated construction lending, and now Participate is a balance-sheet management tool for banks used to sell off pieces of loans they already have and sell them at a premium to increase loan profit and reduce concentration risk,” he explained. “We think this can also create a whole new digital-lending channel and allow merchants to make loans to other merchants.”

Johnner posits an example in which a lumber yard has a small-to-medium size business client that buys $500,000 worth of lumber each year.

“That client needs lower financing costs than a credit card’s 21 percent. We see a day where Participate facilitates a loan between the lumber yard and a carpentry business at a much lower rate, say 5 percent,” said Johnner. “And we execute on our mission to help banks and be a friendly fintech and allow the banks in our universe or our partner’s universe like FIS to put the loans on bank balance sheets in our network.

“We see a day where the lumber yards, mills and manufacturers are getting loans from their suppliers and the suppliers are keeping loyal customers, maybe making a little bit of money on the loan, and then the loan goes on the bank’s balance sheet. It’s a version of buy now, pay later. We’ll see. Most people think we’re a little crazy, but we always think that’s a good thing.”

Participate follows the success of BankLabs’ Construct program, which aimed to create big changes in the annual $1.3 trillion construction loans marketplace. Construct’s +Pay feature automated the construction payment stream for builders, general contractors, banks, title companies or disbursement agents that pay subcontractors.

Builders and banks benefit from the resulting faster process that eliminated paper with electronic lien waivers and invoices, while builders got automated 1099 reporting and project accounting. Subcontractors receive same-day pay through its ACH feature, and all told, this makes +Pay and Construct the world’s first cloud-based, vertically integrated construction-funding platform.

Those innovative approaches have paid off with more than 100 bank clients such as CenterState, a $45 billion Florida-based bank; the $15 billion Plains Capital Bank based in Dallas; as well as smaller banks including the $500 million Valliance Bank in Oklahoma and north Texas. BankLabs’ work with CenterState increased its construction loan portfolio by 567 percent. Altogether, it has managed $37 billion worth of construction loans across 57,000 projects.

While Johnner is based at the firm’s offices in Dallas, it proudly counts Little Rock as its headquarters, building on the tradition of other giants including Systematics and Alltel.  The company currently has 30 employees but is looking to add 16 more staffers in the next six to nine months in the fields of software engineers, sales and customer-satisfaction specialists.

“Our goal is to differentiate the financial institutions that are not happy with the status quo from those that are resistant to change,” Johnner said. “Our clients want new ways to do things that leverage their strengths. We’re at a huge transition point and have a huge runway ahead of us and that’s only possible through great team.”

 

Read article on source website here

Los Angeles Times article

Construction Loan Automation Mitigates Risk

By | Uncategorized
Mitigate Risk with Construction Loan Automation

According to this survey published by American Bankers Association, 46% of respondents cited staffing and 42% cited regulatory and compliance costs as the top drivers of expenses in construction lending. We get it, working to comply with regulations can increase costs. More man powers equals higher costs. One way top Financial Institutions are combatting this growing cost is by automating some of their processes and making sure their reporting is all in one place.

How FIs are getting this done

How are they accomplishing this? With loan automation solutions like Construct. With real-time reporting and alerts, officers know right away when there is an issue needing attention, they don’t have to wait for an email. Detailed audit trails makes reporting easy. The better informed a financial institution is, the better protected they are. Plus, those at-risk loan alerts saves bankers money in the long run.

Auditors love it

Auditors love the custom reporting features. Being able to pull data at any time, anywhere, really makes a difference when looking at compliance. Custom reporting makes it easy for your institution to build exactly what you need, nothing more and nothing less, every time. The 24/7 access really helps stakeholders to complete jobs faster. Instead of waiting to get back to the office to type up notes, inspectors can enter details and photos into the system on site. Setting up alerts means you can get an alert the moment job details are entered so you can take the next steps immediately, rather than waiting on a UPS package or an email with attachments to come through.

Our construction lending automation software is helping over 130 banks effortlessly prepare for audits while mitigating risk. Time stamps and detailed information from all parties puts management at ease. Details can be stored on this cloud based software and easily referenced later.

 

 

Loan Participation Software

Participations Made Easy: Loan Participation Software

By | Uncategorized

BankLabs is revolutionizing the traditionally slow participation process with Participate, the first end-to-end loan participation software for both originators and participants.

Participate is a single platform to manage all loan participations, existing or new, bought or sold. It allows originators and participants to digitize and share loan info, documents, and automate workflow.

Whether its large loans or smaller ones, done with existing partners or new, Participate can cut weeks off the traditionally slow origination process, giving your bank the additional liquidity and flexibility needed to maximize profits.

See how to use automation to increase loan participations here.

Save Time and Lower Expenses

Looking to find the right participant partners? Participate eliminates the need for phone calls and back and forth emails. Just choose who you want to partner with and let Participate do the rest, including electronic NDA’s and non-compete agreements.

Once the agreements are in place, the document repository gives originators and participants easy access to documents and underwriting information, eliminating the need for overnight packages, couriers and drop boxes.

From origination through closing, Participate’s digital workflow includes notifications, electronic document exchange and e-signature, keeping everyone updated and taking weeks off an otherwise cumbersome process.

Back Office Management

Once loans are closed, Participate records the transaction history for each loan, along with the pro-rata share for each party. It also notifies each participant when funds are requested or disbursed, keeping everyone on the same page in terms of dates, amounts and interest accruals.

The document repository has built in reminders for when documents need to be updated, and automatic notifications to downstream participants when new documents are added.

Custom reports are easy to build and can be created by loan type, bought vs sold, maturity date, interest rate, etc., all exportable to excel.

Fine Tune Your Balance Sheet

Whether it’s originating new loans or participating out existing ones, Participate streamlines the process so deals are faster and easier to do, allowing for more liquidity and flexibility when it comes to managing your balance sheet. Loan participation software is your answer.

Loan Participation Software

participations made easy

 

Construction Loan Automation helps increase draw incom

Loan profits increase in 2020 according to MBA report

By | Uncategorized

The average profit on each loan originated in 2020 was up significantly compared to the average profit in 2019. Construction loan automation streamlines the loan process, resulting in quicker turnaround.

“Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $4,202 on each loan they originated in 2020, up from $1,470 per loan in 2019, according to the Mortgage Bankers Association’s (MBA) Annual Mortgage Bankers Performance Report.”

 

What this means for Lenders

What does this mean for lenders? Increasing draw fee income is on everyone’s mind. Bankers are turning to new technology like construction loan automation to do just that. Construct is an online tool helping banks streamline their construction lending process, and borrowers love using it. It’s a great way to differentiate your bank for the competition.

Bank leaders around the country are getting behind loan automation tools like Construct as a way to increase their interest fee income. By speeding up the process, lenders are saving days on their loan cycles, resulting in higher margins.

How Construct Helps

What else can loan automation tools do for you? Lenders are finding that staff has a greater capacity to take on more loans with Construct, because so many of the tedious steps are taken out of the equation for them. Instead of 100 projects, some lenders are able to now handle 250 projects using Construct. As the construction sector bounces back from Covid, more companies will be looking for loans. In fact, demand for newly constructed housing is on the rise too. This is great news for lenders looking to increase their project portofolio.

Construct takes the spreadsheets out of the lending process and sends users real time alerts. When an inspection is done, you automatically get notified and can complete the next steps from anywhere, right from your phone, in minutes.

 

 

IMB Production Volumes and Profits Reach Record Highs in 2020 | Mortgage Bankers Association (mba.org)

Construction Loan Automation helps increase draw incom

construction employment graph

5 Charts that Summarizes Construction during 1 year of Covid-19

By | Article

This month marks one year since Covid-19 changed the construction industry, and the world, forever. Boston was amount the first metro areas to issue a stop work order, others were soon to follow. This resulted in a huge dip in production for the industry. The charts show a drastic drop in not only construction employment, but demand for construction in general.

 

Another metric to look at is the Architectural Billing Index. You can really see the effect of Covid-19 on this metric as well. If construction employment and architectural billing plummeted, one metric that did rise was material costs. Employee absences due to illness greatly disrupted transportation and distribution of materials, making accurate estimates in the construction project realm difficult to nail down. With materials fluctuating, this caused a whole new problem for construction lenders.

 

The good news is, all of these metrics are beginning to return to their pre-Covid-19 levels. As talk of vaccines strengthened, contractor confidence and construction employment steadily begin to rise. While architectural billing is still not quite up to pre-pandemic numbers, it does should a steady increase of the last few months, which can only be a positive sign that the industry will be picking up. Some analysists predict that construct may greatly increase to make up for the lag of last year.

construction employment graph

Source:

5 charts that summarize a year of COVID-19 in construction | Construction Dive

 

Construction Loan Automation

MBA data shows demand for newly constructed homes jumps 19%

By | Blog

MBA data shows demand for newly constructed homes jumps 19%

 

2021 has brought something good – more mortgage applications for newly constructed homes. The Mortgage Bankers Association Builder Application Survey data shows that mortgage applications for newly constructed homes jumped 19% compared to last January. This demand is going to increase the demand for mortgage loans as well as help spur new development. All of this is great for the construction lending industry. More construction loans means more fee income, but it also means more work for lenders.

To help gain efficiency and handle the upcoming demand, many banks are looking for digital solutions to streamline their lending process.  Our construction loan automation solution eliminates spreadsheets and cut days off processing time. What does this mean? An 8-12% increase in draw interest, not to mention days saved. Cutting your processing time means your staff can handle more loans without getting overwhelmed.

With the increased demand for newly constructed housing comes an increased demand for construction loan administration. Construct can help you manage this demand.

Source:

https://www.mba.org/2021-press-releases/february/january-new-home-purchase-mortgage-applications-increased-189-percent

 

 

 

 

Bank Director article

Construction Loan Automation helps alleviate top concerns for banks in 2021

By | Blog

Construction Loan Automation helps alleviate top concerns for banks in 2021

 

Each year BankDirector takes a pulse of the industry, asking top leaders what their biggest concerns are and what is on the minds of bankers around the country. This year, the answer was surprising. With the advancements in technology and the growing trend of M&A, banks are looking to differentiate themselves. How are financial institutions positioning themselves to do this?

One way is by keeping up with the digital demand. Customers and partners alike have become accustomed to modernized digital solutions for common banking practices. This includes an intuitive experience and automation options. The days of exchanging spreadsheets is over. BankLabs has seen an uptick in demand for construction loan automation software. Our solution, Construct, streamlines this process for banks. This not only saves them time but grows their net interest simultaneously. Vendors are seeking digitization from banks, making this software a great differentiator.

BankDirectors survey also revealed that 53% of those surveyed are concerned about net interest margin pressure when thinking about their institutions long term viability. How does Construct help your net interest? By accelerating cycle times, Construct helps you fund draw requests days earlier than before. We have found that on average, our clients increase their draw income by 8-12%.

With changes in face to face business interactions and increased acquisitions across the country, banks are looking to differentiate themselves with digitization and relieve net interest margin pressure. One tool they are finding useful in alleviating both concerns is Construct – a cloud based solution for automating your construction loan needs.

Source:

Governance Survey Results: Directors Sound Off on Diversity, Performance