Mac Thompson had 13 years of banking experience under his belt when he made a leap. His career had wound its way from Bank One, which later became JPMorgan Chase, to Bank of America, where as a senior vice-president he oversaw consumer analytics for payments and card strategy and the revenue side of its merchant services business.
At age 35, he left with two colleagues to start a business called White Clay in 2006.
"A giant company was not the place for me," said Thompson, the founder and president of White Clay in Louisville, Kentucky. "I didn't play politics very well. I wanted to take all these tools we had at these giant banks and provide them to regional and community banks."
White Clay started as a consulting business, but has since evolved to become a fintech that helps banks increase shareholder return by curating disparate sources of data and developing revenue growth strategies. Its 20 financial institution clients range from $650 million of assets to $175 billion of assets. The company's compound annual growth rate has been north of 35% for the past six years.
It's also an example of a pattern that has emerged as the fintech industry matures: Bank executives in their 30s and 40s finding second-career success as
"The stereotype of fintech founders being a bunch of 20-year-olds in Palo Alto who dropped out of Stanford and don't know what they're doing is starting to fade away," said Gilles Ubaghs, a strategic advisor at Datos Insights, who has seen several studies pinning the average age of startup founders as mid-40s.
The rate of venture funding to startups run by women continues to decline.
There are opportunities for seasoned bankers itching to apply their problem-solving skills more broadly.
"The media perception is that all fintech people are in their early 20s and are coming out to revolutionize banking. But if you look at the people who survive and grow, the majority are people with experience," said Thompson. "A lot of neobanks are built by people with technology vision without understanding the regulatory and overall financial complexity of banking," such as the realization that debit card interchange is a shaky long-term business model.
"Maybe in the last five or six years, that has tilted more toward the first group of people, which are people who are spinning out of financial services and building a solution for a problem they knew," said Gotsch. She has also noticed digital currency companies welcoming talent from financial services as the sector has matured and companies have needed to create infrastructure such as exchanges, trading platforms and compliance tools.
"In our experience, the strongest and most sustainable startups with the best product-market fit are often founded by people with deep experience in the fields they are looking to impact," said Arvind Purushotham, head of Citi Ventures, a venture investing unit within Citi. "These founders often build solutions they wish they had access to when they were in-house, and tend to seize the opportunities they identified while working for an incumbent."
Their credentials are attractive.
"Particularly in a downturn, capital flocks to maturity," said Dave Unsworth, general partner and co-founder of Information Venture Partners, a fintech-focused venture capital firm in Toronto, Canada. "A person in their 40s could still be a first-time entrepreneur. But in a market like this, finding that path to market with less friction is more appealing to certain investors, at least investors like us that build a concentrated portfolio within fintech B2B."
He estimates that two-thirds of the companies his firm funds have founders with previous careers.
Thompson and his co-founders mostly bootstrapped the company. So did Chris Aliotta with his startup, Quantalytix. His underlying mission is similar to Thompson's: export the expertise that large financial institutions can afford to smaller ones.
Quantalytix helps both banks and nonbanks assess the profitability of their loan portfolios, understand pricing dynamics and more on one platform. Aliotta co-founded Quantalytix in Birmingham, Alabama, in 2016. He was a commercial banker for 12 years prior, splitting his time between M&T Bank in Buffalo, New York, and Regions Financial in Birmingham, and specializing in asset liability and balance sheet management.
The company has five clients, both banks and nonbanks; the largest has $1.5 billion of assets. Aliotta says he is taking a measured approach to growth and is selective with his customers.
"The knowledge and credibility of being able to speak the language, how we are using technology to solve the problem that is omnipresent within the space and articulating that vision in a way that isn't scary to executives" are key selling points, he said. His previous experience at two large banks, "is certainly a credibility builder. Having that prior work experience makes sure you know what you are solving and helps you identify those pain points because you've lived those pain points."
The image of fintech founders being young and fresh out of college is more typical of the retail side, in Aliotta's view.
"The stuff that customers see will be driven a lot by the younger generations because it's the low-hanging fruit. If you think the website stinks, that's where the innovation is occurring with the younger generation," he said. "But there's a whole other side of banking which is a specialized set of knowledge that includes the operational aspect, the risk management aspect and the banking strategy aspect."
While this knowledge is crucial, a previous career still doesn't prepare first-time entrepreneurs for the challenges in starting a business.
"At the bank you never had to worry about cash flow," said Thompson. "As an entrepreneur you learn in the first month that cash flow is everything."
