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Dan O’Malley
Founder and CEO, Numerated
Age: 40
Industry experience: 15 years
The Boston fintech firm Numerated spun out of Eastern Bank two years ago, boasting it could approve business loans of up to $100,000 in five minutes. Since that time, Numerated has more than doubled its workforce, signed 11 banks onto its platform, tripled its revenue on an annual basis and can now approve loans up to $250,000 in its trademark five minutes. Recently, FinTech Breakthrough named the company as the best business banking lender in its global competition.
The genius behind Numerated is Founder and CEO Dan O’Malley, who first created the company inside Eastern Bank. O’Malley’s background and education are in data science. Before coming to Eastern he worked at Capital One, not only because he loved credit cards and banking, but because he enjoyed the opportunities it offered to build products and technology based on data.
Q: Numerated has seen tremendous growth since spinning out of Eastern Bank. What has been the most surprising part of the platform as you have grown?
A: The interesting thing that’s happened, as we’ve gotten our platform to more and more customers, is they have told us they want to do more products on the platform in addition to business loans, such as credit cards and overdraft fees. We’ve recently announced that we will approve agricultural loans on the platform. We’ve realized it’s not about selling one product. It’s a platform for doing relationship management and relationship growth using digital tools.
Originally, we thought about it as a small business lending platform. But once we left Eastern and got perspective from other banks, we realized that building the platform in a relationship bank like Eastern proved incredibly valuable for driving relationship growth.
I’ll give you an interesting piece of data to really bring that to life. Our analysis has shown that banks, dollar-for-dollar, will drive as much lending outside of our platform through larger business loans as they do on the platform. Because conversations start with, “Hey, I can get you a $100,000 loan today,” but then end with, “Oh, how else can I help you? Do you need a $500,000 loan? Well, let’s talk about that, too.” The platform can be used to message people and what starts as an online relationship often turns into an in-person meeting. The platform also sends personalized marketing to businesses.
Q: Numerated started originating loans up to $100,000 in five minutes, and now you are up to $250,000. Small banks make a lot of their money by doing $1 million loans. Could you get your system to originate loans that high?
A: Yes, absolutely. We’re in conversations about how we’re going to do it right now with a few of our customers. It’s really important to say that the five-minute, million–dollar loans probably isn’t going to happen. But all the tools that we’ve built to do the five-minute, $100,000 loan will change the experience of borrowing $1 million. It is going to make it easier for the borrower and will give bankers better tools to go and have those conversations.
Equipping bankers with the tools to have really good, meaningful conversations about million–dollar credits is absolutely going to happen. And the market is demanding it happen right now. Good relationship banks have realized that they are investing in technology to be able to prospect better, have these great conversations and make it easier for businesses to borrow from them.
Q: You have formed a partnership with FIS and integrated your technology onto a number of its core systems, but not all of them. Is there a reason you can get some integrated and not others?
A: We’ve got data integrations into six cores right now and real–time funding integration into one, and we’ll do another one later this year. You can always do a data integration, but not every core can do real-time funding. It just depends on what APIs have been built into the core to do various things. Some just don’t have the APIs to do the integration. I don’t know all of them off the top of my head that do versus don’t, but I do know there’s at least one we bumped into that really couldn’t do real time funding and I’m sure there are more.
Q: What advice do you have for a community bank that’s never partnered with fintech, but wants to start?
A: Most banks don’t have the resources to digitally transform the entire bank, so you’ve got to be conservative where you place your bets to make sure that they’re really core to the bank. But you also need to be aggressive in going after those opportunities because the market is moving quickly. Customer experiences are moving faster and for our customers, their perspective is that business lending is really core to the bank. Our banks have concluded they need to move aggressively to defend their turf, and business lending and business banking is key to that.
Q: There has been some development of open cores, which would allow banks to have access to the proprietary technology to make changes and integrate fintech without permission from the core processing companies. How far do you think we are from getting to a point where the average small bank might transition to a core like that?
A: I think it will soon be possible; it’s just a question of whether it’s worth the effort to do so. I think for smaller institutions, it’s simply so much easier to be able to buy from your core provider that even if there is another tool or core available, it just doesn’t make sense because your core provider can get up and running quickly with the latest technology. So, certainly in our partnership with FIS, we see that we can get a bank up and running very, very quickly because we’re sitting inside the same data center that they already use to host their core.
O’Malley’s Five Learnings for Leading People Through Difficult Change
- Always start with why change is necessary. Change is hard, but the alternative is harder.
- Empathize. If you can’t understand why change is hard for someone, you won’t win them over.
- Give people as much control over decisions as you can, so long as you’ll get to 90 percent of the outcome you need.
- Use data to help people understand why you, as the leader, have the opinions you do.
- But also use stories of other people in their situation, not data, to convince people that the change your leading is good.
