JEANS AND BARE FEET
Megan Darnell is new to the mortgage business. She’s actually new to all of financial services. She never worked on Wall Street. And she didn’t hedge servicing portfolios. She wasn’t a loan officer or an underwriter. So what did she do? She grew avocadoes in Mexico. (Hey, I mean, not super relevant, but why not?)
She and her then-partner took over his family’s avocado business in Guadalajara, Mexico. Now, she’s in fintech.
Not exactly the strangest career path I’ve ever heard of, but let’s just say it’s different. And most people love avocadoes so it’s always nice to be in a business where the product sells itself. (Mortgages and checking accounts— not so much. Sorry Megan.)
Since July 2018, her job has been with the fintech accelerator arm of a bank based in Kansas City. She’s program manager for Fountain City Fintech. In that type of work, it’s really a plus not to have entrenched ideas about how things have always worked. Way better to know about avocadoes, actually.
She describes herself as an entrepreneur. She’s into finding better ways to do things. And fintech is definitely where it’s at today for young(ish) transformational industry leaders and innovative tech players. There are so many ways technology can improve financial services. So Darnell and her team at nbkc bank, Kansas City, MO, come at it with the requisite set of fresh eyes.
I first met Megan on a phone call back in March. As we chatted, she mentioned she’s in the office wearing jeans and bare feet. It was her way of stressing how laid back her company is. The clear message to me was this is not some stuffy, uptight, bank.
In so many words, she was underscoring the changing of the guard that’s under way in financial services–especially fintech. The people taking the reins of the business today are different. Say goodbye to carefully coiffed headshots, PR-sterilized bios, uptight executives in suits and ties, pearls and heels. Welcome to fintech. People here are hard at work breaking the rules and writing new ones. This is not your grandmother’s (or your mother’s) banking business. It’s way more real than that.
I know we are all supposed to know what “fintech” is, but for the rare reader who might not be fully aware we decided to consult a trusted definitive resource—Wikipedia. The site offers this definition: “After reviewing more than 200 scientific papers citing the term ‘fintech,’ a study on the definition of fintech concluded that ‘fintech is a new financial industry that applies technology to improve financial activities.’” (Wow, they reviewed 200 scientific papers for that?)
But what’s Megan Darnell’s story and how did she get involved with fintech in the first place?
Darnell was born and raised in Missouri and earned a masters degree in Entrepreneurism and International Business at the University of Missouri at Kansas City.
Her background is in entrepreneurism, and her joint ownership of the avocado business made her appreciate all that goes into being an entrepreneur. Finding a financial partner to get your business off the ground and gain access to the resources to scale your business are critical. And that is at the core of what she is doing today.
But first, a tiny lecture (my apologies upfront).
Silicon Valley venture funds are a possible start-up funding source for startup financial technology firms. But they don’t really know the banking space and, as a result, have demonstrated some serious blind spots. To really understand financial services–and exactly what the sector needs in terms of workable tech solutions–it helps to be a bank. But then again, banks have a slight incentive to keep things running the old-fashioned way–especially if they have built up substantial market share under the old model.
This is why there’s such a need for a new breed of start-up financial partner that is not afraid of fintech–and actually, wholeheartedly endorses it. This is what Darnell’s bank is doing. And it’s part of why she’s so eager to convey that hers is not a stuffy, old-line bank, but really part of the new breed.
End of lecture, now back to Darnell’s story.
She graduated from high school back in Missouri and admits that she “had no idea” what she wanted to do after that. So she went to community college and got her undergraduate degree in marketing and management.
She worked at the local YMCA, sold ads, cleaned apartments and served as a substitute teacher in four different school districts. She says, “I didn’t know what I wanted to do, so whatever came up I was hustling.” But somehow all of that didn’t satisfy her career ambitions.
So she moved to Mexico and with her partner helped create “Nature’s Finest Produce” avocado business. While living in Mexico, she continued her studies at the University of Guadalajara.
But then she decided to come back home and enter a graduate program focused on entrepreneurism and international business at the University of Missouri at Kansas City.
A mentor in her program took her aside and said she should stay in Kansas City because he had the perfect job for her. He introduced her to the Managing Director of Fountain City Fintech. “He hired me on the spot to be the Program Manager of the accelerator and we built the entire thing from the ground up in just under 3 months.” Darnell adds, “Most accelerators take at least a year or two to build.”
Before she got the interview, Darnell recalls her bags were packed and she was ready to go back to Mexico. So what was so appealing about the job that made her ditch her return ticket?
She explains it this way: “So none of this existed before I came along—it was all in the idea phase. And I loved the idea and couldn’t wait to help make it a reality.
There were two components to what Fountain City Fintech had in mind. One was a fintech accelerator program launched a year ago and the other was an Entrepreneur-in-Residence program launched this spring.
Darnell says, “The fintech accelerator is what I was brought on to help build. This is the 75-day program in which we take approximately 5 companies into our bank and provide them with programming, mentorship, investment opportunities and everything bank-related that they will need to scale their business.”
The idea behind the Entrepreneur-in-Residence program is to bring in former entrepreneurs and entrepreneurially minded people and “have them work with us and build businesses to solve problems in the community bank space,” she says.
When she heard about the bank’s ideas for these programs she was “blown away.” She says, “It was a match made in heaven.”
To better understand the appeal, you have to understand that nbkc is no ordinary bank. She gets excited when she starts to explain just how different her “bank” is from the run-of-the-mill member of the American Bankers Association.
Darnell says, “What our company holds near and dear is our culture. We are the epitome of non-bankers. We have a very laid back culture.”
In an effort to hold onto that culture, the executive team turned its focus to fintech. The bank has done roughly 14 fintech partnerships since the accelerator program was launched last July.
From its creation, nbkc has done things differently. It was never quite a typical commercial bank or a typical mortgage bank. Darnell says nbkc started back in the ‘90s and its focus then was on selling mortgages online to consumers. She adds this was “almost unheard of at the time.” (Yeah, we remember.)
She notes that nbkc began selling mortgages online about the same time Amazon started selling books over the Web. She jokingly says she would rather not think about which of the two is further along in terms of growth. (Right, better not to go there.)
Darnell says nbkc got a bank charter to support its mortgage business. And it still does about $2 billion to $3 billion in mortgages annually, mostly residential.
A typical day
She describes her day-to-day job as “crazy.” In the short year she’s been with the bank, growth in the fintech sector has been huge. She sees new ideas every day that could be the next big thing.
“Ninety percent of those applying to us were on a mission, not just to make money, but to fix a problem.” She sums them up as “cool people doing cool stuff.”
It took her a while to get up to speed when she first came on board. “There were a lot of bonfires and the learning curve was pretty steep,” she says. Even so, her team built in about 3 months, a program that normally takes 18 months to launch. nbkc has a very flat organizational chart, so it can make decisions quickly.
Her day to day involves lots of meetings with fintech players. She says when they were first launching the program, she and the accelerator’s Managing Director Zach Anderson Pettet would joke they were bilingual—they spoke both “Entrepreneur and Banking.” (Two different languages, that’s for sure.)
She adds that while Pettet also spoke “fintech” from the start, she, too, is now nearly trilingual, having learned the fintech language after taking “almost a year to learn that verbiage.”
Since the accelerator program’s launch last summer, they have met with about 300 different fintech companies from 38 different countries on 6 different continents.
Since I personally know a little bit about the mortgage business, I was curious as to what kind of pitches she’s getting from fintech players with mortgage solutions. Actually, I just bluntly asked how far behind she thought the mortgage business was in terms of tech adoption.
“That’s a good question,” was her polite reply.
She describes the “ebb and flow” that’s occurred when it comes to mortgage origination technology adoption. The business saw attempts go from being all-paper, to all-automated, and now back to where companies are building pitches around the message: If you call us, a human will always answer the phone.
But Darnell says, “There are many areas of the business where good technology could make inroads.” She says there are “a ton of inefficiencies in the back office. There’s a lot of low-hanging fruit there.”
Darnell underscores something that many in the business have long understood: “At the front-end, you have to walk a fine line. Putting too much technology in place there can have a negative effect.”
When it comes to that first touch with the mortgage consumer, the products and the application process are so complex that “the human component has to stay.”
There is one crucial area where Darnell is seeing a lot fintech activity that could have a profoundly positive impact on the mortgage business. She talks to many fintechs and says there has been “a lot of focus on the savings crisis in America.” She says, “Just under half of all Americans—46 percent–don’t have $400 in their savings accounts.”
If we were able to start solving that problem in a real sustainable way, so many more people would have financial cushions and that would be great, she says. “I see a lot of startups trying to fix that,” she adds. And incidentally, if they succeed, that would create lots of new homeowners.
Far from Wall Street
Networking is a big part of her job in getting the word out about the accelerator. That is what brought Darnell to the NEXT mortgage technology conference in February 2019 in Dallas.
But two other things have won them positive acclaim in the fintech universe. The speed with which they approve fintech partnerships is one. She says, “Speed is our secret sauce.” The other thing this Kansas City-based bank has going for it is it is based nowhere near Wall Street.
Lingering negative perceptions of Wall Street big guns have made many startup fintech entrepreneurs wary of those types of players. Darnell says her bank’s distance from Wall Street, “definitely does help a lot.”
And the fact that most fintechs need a banking partner to hold deposits on their behalf as they grow is another factor that has brought in considerable business.
Positive press in the world of fintech startups has been another key part of the accelerator program’s success. The day we reached her by phone, Darnell was set to talk to a company from the United Kingdom, a Canadian company, an Australian company and two American companies. So the word has definitely gotten out.
What are some fintech startups that Darnell’s bank has helped launch?
One is a first-time homebuyer education company designed to help millennials buy their first homes. The company’s name is Digs (digs.com), based in Chicago. Digs is designed to help future homeowners save for a home purchase and it provides homebuyer education explaining puzzling mortgage terminology and unanticipated costs, such as appraisal fees.
Another company called NuMoola, based in Philadelphia, focuses on children’s financial education. The company is built around a platform where parents and children can interact through the concept of “chores.” This approach enables the child to learn financial literacy skills early on. Young people can earn, save and donate on the app (website: numoola.com).
Another venture helped by Darnell’s accelerator program focuses on debt consolidation and payoff. The company, called Destiny (yourdestinyapp.com), is now based in Kansas City after participating in the accelerator program. It provides an avenue for average Americans to save and build up an emergency fund, as well as understand the best way to pay down their debt.
Another company is focused on combating the payday lending crisis. Onward Financial (getonward.org), Kansas City, is the only nonprofit from the 2018 class of participants in the fintech accelerator program. Darnell says Onward exemplifies a mission-focused fintech. It works with employers to provide a financial cushion to their employees. She says think of it is as a kind of 401(k) for funding an emergency savings fund. Once an employee saves $500 through the program, he or she can take out a loan for up to $1000 at normal interest rates—avoiding the payday loan trap.
Where does Megan Darnell see her career going next? “I adore the startup world,” she says. (Well, that’s pretty wide open.)
She says if she can make a difference by helping any of the companies supported by her program change real people’s lives, then that would be an accomplishment. “I would call that a win for sure.”
But is it the tech world where she really wants to stay? Is she a techie? “No,” is her quick reply.
She’s actually the one her colleagues call into the room when they are trying to see if they are explaining something in terms a non-techy person can understand. She serves as a stand-in for the average, tech-clueless, consumer. (I can relate to that.)
She’s seen enough product demos, by now, to believe that effective tech-based solutions can solve real-life problems.
And you don’t have to be a tech wizard to help companies get those solutions into the hands of consumers. An even better way to do it is by being their start-up banker.
So that’s her current mission. And although she’s looking into maybe going to coding bootcamp, her value-add goes well beyond her current tech IQ.
“Avocadoes aren’t very techy. My expertise is in operational management,” she says.
So if you are an entrepreneur and you have an idea for a cool new company, you might want to give her a call. That gets me thinking, what about something like hydroponic avocadoes? (OK, folks back off, that’s my idea.)
Darn, just Googled it, and it’s already a thing.