Banking is among the world’s most significant industries. Yet, while billions are spent annually on providing technology to financial institutions (FIs), the sector remains dominated by only a handful of legacy vendors that fail to deliver modern, scalable and high performing solutions. Customers expect their financial institutions to offer responsive and engaging experiences, and we know the future of banking will be represented by cloud-based, nimble technologies. Further, as the challenges of the past year and the shift to remote operations have exposed the fragility of branch-centric technologies, we see an accelerated decline in the position of these legacy tech providers who will make way for best-in-class modern platforms. We believe Narmi, our most recent investment, will lead this charge.
At NEA, we are excited to partner with teams who enable access to new technologies and help move industries forward. Plaid is enabling developers globally to deliver cutting edge fintech experiences, Divvy is bringing access to credit and capital to SMBs across the US, and Mulesoft is helping businesses integrate with modern applications and get to market faster. In a similar vein, we believe financial institutions are eager for a new delivery model to best serve their clients in a post-COVID environment. We’re thrilled to be working with Narmi, the leading software provider bringing composable, cloud-based digital tools to help regional financial institutions thrive in a digital-first world.
With pressure from evolving customer demands, potential consolidation, and a new interaction model defined by the pandemic, financial institutions must accelerate their digital transformation to get ahead. While 85% of FIs have embarked on a digital transformation journey, only 7% claim to have deployed their new stack at scale. With financial services SaaS revenues alone projected to grow to nearly $30B by 2023 and ~28K potential customers globally, there is clearly tremendous opportunity to deliver cutting-edge software to financial institutions and help them truly achieve modernization and transformation.
Emerging challenger banks and scaled tech companies like Divvy, Square, Apple, and Google have up-leveled consumer expectations for banking and have demonstrated how powerful digital financial experiences can drive user engagement. Consumers are no longer willing to accept long call center hold times, fractured digital account opening, poor mobile design, or a lack of channel integration. These trends have been further accelerated by the pandemic: only 40% of bank customers plan to resume visiting branches after the pandemic, and 35% of banking customers have already increased their usage of online banking services over the past few months. As banking accelerates away from branch-first towards digital-centric, it must simultaneously evolve into a consumer-first service and deliver the personalization and curated offerings that are necessary for success in today’s market.
All organizations are feeling the need to adapt. Citi, Bank of America, Wells Fargo, and JPMorgan – equipped with hefty budgets and sizable in-house development teams - each spent between $8-11.5B in 2019 on developing or maintaining technology and saw a marked uptick in engagement this year. Community and regional banks, which differentiate themselves from the giants with their physical presence and involvement in local communities, are under no less pressure to innovate. Over the last 25 years, amidst some industry consolidation (3.2% YoY), membership per credit union has increased 6% YoY and the number of ‘potential members’ a credit union can accept has soared by 16% YoY. These institutions were first on the scene with PPP distribution this year and are seen as incredibly customer friendly. With a wealth of customers knocking on their doors, these institutions must also adopt new technologies to allow them to meet their customers where they are.
Our initial introduction to Narmi came after speaking with dozens of operators at regional and community FIs to understand what software the most progressive players were leveraging. Narmi offers API-enabled account opening, mobile banking and online banking products that allow banks and credit unions to adapt and thrive in a digital-first world and create a more diverse and engaging financial platform for their end-users. In just a few years, the Narmi team has built a tremendously powerful product suite that is powering banks and credit unions of various sizes, geographical areas, and core banking systems.
There are six reasons why we think Narmi will lead the effort in digitizing the nation’s regional and community financial institutions:
- Best-of-Breed and Comprehensive Product Suite: Bank IT buyers currently juggle a long tail of vendors and are eager to consolidate. Narmi is the only modern player in the market with a broad product suite that includes account opening, digital banking, and a powerful admin backend. Importantly, its individual products are still seen as best-of-breed and cover both consumer and business accounts. Customers can be acquired with any of the four main products and have been cross-sold effectively over time. The Narmi team has clearly demonstrated that once a financial institution buys from them, they can’t wait to buy more.
- Powerful Account Opening Platform: Online account opening is a critical part of customer acquisition for any bank and Narmi reduces application time from 24+ hours to 2 minutes and 13 seconds. The Platform boasts an industry leading 70-80% completion rate and is the most cost-effective and scalable way for banks to drive growth. Interested in seeing how it works? Sign up for a demo here.
- Modern Business Banking: Financial institutions are looking to deepen their relationships not just with retail, but with commercial customers as well. With the disbursement of PPP loans this year, many regional FIs were first on the scene and built trusting relationships on main street and beyond. They now need modern technology to serve these customers. Narmi’s business banking suite is unparalleled with seamless mobile-based entitlement control, dual approvals, and robust wire functionality. Further, the technology boasts a seamless interaction with the consumer banking platform. Narmi’s research found that a new business owner is most likely to open an account with an institution that already provides them with their best consumer banking relationship.
- Technology Architecture Designed with Buyer in Mind: The company’s architecture was devised to strike the right balance between open and closed system design. The platform allows for end user customization, but has more than enough functionality to not require extensive in-house development. Narmi’s AppXchange marketplace, which enables financial institutions to easily offer products from new-age fintechs, is a natural growth lever and reduces the need for banks to manage bespoke integrations. Narmi allows FIs to have more control over their roadmap than any other provider in the market.
- Resoundingly Positive Feedback from Customers: Narmi serves large and small financial institutions alike and earns rave reviews across the set. Here are a few of our favorite quotes from customers: "the most forward-looking technology play,” “automated in a way that was not being done as yet,” “a ton of control afforded to the configuring institution,” “thinking about the problem from a tech standpoint first,” “doesn’t require the bank to have significant IT staff focused on this,” “the most responsive team and continuously updated tech,” “impressive integration timeline including scoping,” and, simply, “Narmi is brilliant.”
- Impressive Team with Unique First-Hand Perspective: The company's founders, Chris Griffin and Nikhil Lakhanpal, started Narmi based on their own experiences running the largest student-run financial institution in the country at Georgetown University. They experienced an immense amount of frustration in creating an adequate digital experience for their user base and after spending a few years working for Barclays and Citigroup, respectively, they decided to tackle this problem head-on. Already equipped with their own unique perspective from running a financial institution, they’ve further bolstered their team with industry vets from relevant bank-tech companies.
As banking service delivery continues to move online, regional financial institutions can maintain their relationship-first customer edge by partnering with the right software vendors for personalized digital delivery. Narmi helps these organizations bypass historical barriers to digital transformation and levels the playing field between community banks, credit unions, and the largest retail and commercial banks globally. We believe Narmi is uniquely positioned to help FIs compete. NEA is thrilled to lead their Series A financing. We look forward to partnering with Nikhil, Chris, and the Narmi team as they work to become the de-facto digital platform for financial institutions.
If you’re interested in joining the team, check out open positions at https://www.narmi.com/about/careers.