Providence software firm taps into online banking

Andera Inc. is benefiting from the growing number of financial groups aiming to attract new customers without building new banks or credit unions. Instead, the Providence-based tech firm is using its software that enables new customers to open accounts online.

Service Credit Union, which serves the U.S. Department of Defense, is the latest institution to contract with Andera to bring in new accounts via the Internet. The credit union hopes the software will help it extend its services to defense department employees worldwide, according to a joint statement released late last month.

“With Service Credit Union’s worldwide field of membership, we need a solution to allow members to open and fund new accounts anytime, anywhere,” said Gordon Simmons, the credit union’s president and CEO, in a written statement.

Though he declined to disclose financial details of the agreement with Service Credit Union, Andera President Charles Kroll said the private company’s compensation is based on the number of new customers the credit union acquires using the software.

Kroll noted that about 5 million people are eligible to join Service Credit Union, a credit union that already has 100,000 members and more than $1 billion in assets. The credit union has 22 branches but also eligible members worldwide.

Andera’s New Accounts Online software offers those eligible members a way to open new accounts over the Internet within 10 minutes, instead of the three weeks it could take to mail in paper applications from abroad, Kroll said.

Kroll noted that 41 institutions have become clients of Andera, and the company’s client list is growing steadily every month as more banks and credit unions adopt the means to offer people the ability to open accounts online.

Andera was incorporated in 2000, the same year it received its first round of venture capital financing ($300,000) from Building2 Investments, of Tokyo. Earlier this year, the state-funded Slater Technology Fund led a $500,000 round of capital investment in the company, according to Thorne Sparkman, a managing director for Slater.

Though most banks and credit unions adopted online banking in the 1990s, their customers used the Web primarily for looking over account information or paying bills. Opening accounts on the Internet, however, is a more recent trend in the industry, Kroll explained. In fact, Kroll believes the catalyst to this banking trend was the 2001 passage of the U.S. Patriot Act, which basically clarified the protocol for verifying electronic information.

“Whereas the U.S. Patriot Act was very limiting in a lot of ways,” he said, “it actually was pretty liberating in this (industry) because it identified new areas of electronic verification that were authorized.”

Andera’s work force has doubled in the past year from 10 to 20 employees, bringing more high-tech workers to the state.

Kroll said he expects the trend in online account opening to follow the same growth curve seen in online banking during the 1990s.

So are his investors.

“Now what we are seeing is Andera sort of catching the wave,” said Slater’s Sparkman. “The wave is getting big now and Andera’s out front.”