The tale of two fintech products from M&T Bank — a recently shelved business valuation tool and a newly elevated attorney banking service — illustrate the bank's larger approach to fintech development, says the leader of its fintech innovation team.
M&T folded Nota, a digital banking platform for attorneys, back into the bank early in 2024 after considering whether to spin it off as a separate entity, says Christopher Kay, who leads M&T's enterprise platforms and oversees its consumer and business banking divisions. The bank's fintech team had developed the Nota software and scaled it up for four years.
GrowGrade, an in-house fintech startup developing an online business valuation tool, was taken offline in early 2024 and moved to the bank's "backlog" of concepts that may be further developed in the future, Kay says.
"We didn't get far enough in that to say this is scalable or this is something that in its own essence would be something that we would productize," Kay says. "It was more of a product feature than something we felt could scale."
A tale of two fintechs
Nota emerged from the insight that attorneys "have a particular need to be really, really good at managing trust accounts for their clients," Kay says. "They were struggling and there was a better way to help them with that process."
From that customer pain point, the bank's fintech team developed a service akin to a chief financial officer "on the shoulder of a lawyer" to help manage transactions for caseloads for multiple clients, Kay says. "That allowed us to build out a broader platform that would essentially allow us to design a bank specifically for lawyers. That really allowed M&T to learn more and more about how to support lawyers in the execution of their work every day."
The bank plans to continue to evolve Nota with its business banking team. Some of the fintech development team members will continue to develop Nota, while others have returned to incubate other ideas in M&T's portfolio, Kay says. M&T's fintech development team, dubbed "the innovation team," has 12 members who work both on internal fintech development and external concepts with fintech startups.
GrowGrade was launched in beta in 2022 to help business owners get better insight into the impact of expenses and profitability on their business values, as well as how they were doing relative to other businesses and how to make well-informed decisions about their growth and how much capital to deploy, Kay says.
"We had a hypothesis that all businesses across America had an unmet need to be able to assess: What's my business worth? How am I doing?" Kay says.
GrowGrade, or the basic concept behind it, could be revived at some point in the future, Kay says.
"Ideas never die; it's just that their time might not be yet," he says.
M&T's innovation strategy
M&T's fintech strategy is to develop concepts and "build startups internally" with its innovation team while also meeting with "hundreds and hundreds" of outside fintech venture capital startups every year, Kay says. From those outside firms, the bank may commercialize only a few concepts, he says.
"There's a small fraction of those that we will pull in and move forward, but I'd like to see that number continue to grow over time," he says.
"It's super important for us to assess what waves are forming out to sea. That's what's happening in the venture ecosystem," Kay says. "Startups are really, really, really good at being laser-focused on a common problem."
M&T is more inclined to help fintech startup companies grow and mature as customers than through mergers and acquisitions, Kay says. "I don't think our job is to find the best and buy them. I think our job is to support the innovation ecosystem to ensure that they can contribute overall to the financial health of this industry."
Currently, most fintech development is focused on improving bank service centers, deploying better analytics, payments innovation and helping large companies with their sales processes, Kay says.
The overall goal is to keep moving forward through the funnel of ideas that address specific customer needs while focusing on those with the best potential to advance, he says.
"Of the many ideas, most won't work," Kay says. "Part of our human challenge is we all fall in love with our own ideas, right? Innovation — the discipline that we're building at M&T — allows us to test a lot, not with an expectation that everything is going to work, but to ensure that the things that don't work we've learned from."
