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Banking & Finance

Live Oak Bank Adopts New Cloud-native Core System

By Jenny Callison, posted Oct 2, 2020
Live Oak Bank has adopted a new, cloud-native core system to run its digital banking ecosystem, according to a recent news release.
 
The provider of that core, Finxact, is well known to the bank’s parent, Live Oak Bancshares: Investments by its subsidiary have helped Finxact develop and grow.
 
Live Oak Bancshares Chairman and CEO James “Chip” Mahan has known Finxact co-founder and CEO Frank Sanchez for decades, and was instrumental in getting Sanchez to develop the core-as-a-service platform, according to a Jan. 19, 2019 piece in American Banker. In 2017, Live Oak made an initial seed-stage investment in the new platform, and was part of a $30 million funding round in early 2019.
 
Currently, Live Oak Bancshares, through Canapi, owns a 16% interest in Finxact, Fintech Futures magazine reported Sept. 23.
 
In the recent past, Live Oak Bank deployed Finxact’s core banking platform to power its digital banking ecosystem.
 
Then, in late September, the bank began offering business savings and CDs on the Finxact platform to Live Oak’s rapidly growing deposit customer base, the release stated, adding, “Finxact is also currently powering the bank’s PPP loan portfolio that is helping over 10,000 small businesses, including both new and existing customers.”
 
Finxact’s core system runs in the cloud on Amazon Web Services, but, unlike many other cloud-based core systems, it is sold as software-as-aservice (SaaS), meaning that clients pay for it with a per-user monthly subscription fee, rather than having to make a large capital outlay and perform hardware maintenance, a Jan. 19, 2019 article in American Banker pointed out, adding that payas- you-go plan potentially makes it affordable to community banks.
 
In choosing Finxact’s core computing platform for its retail operations, the release stated, “Live Oak is now able to better meet the evolving needs of its customers during this era of rapid change by improving integration among banking channels, lowering operating costs, and shortening the time to market for new products.”
 
Live Oak officials believe their investment in Jacksonville, Florida- based Finxact is paying off in efficiencies for the bank.
 
“This is a significant milestone for Live Oak Bank. We have put an incredible amount of energy into recreating the financial services landscape, and a modern core is key to that transformation.
 
“As we move forward, the possibilities of what we can build for our customers are endless,” Mahan said in the release.
 
Finxact’s Sanchez said his firm worked closely with Live Oak Bank and other best-in-class fintech providers to create a scalable, agile and regulatory compliant system that would allow the bank to innovate and evolve its business on its own terms, and to “implement their vision of the future of banking in the digital era.”
 
Huntley Garriott, president of Live Oak Bank, said in the release, “We believe the Finxact core is the new standard for the industry.”
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