M&T Bank creates tech startup amidst focus on innovation

By Dan Miner
Buffalo Business First

Paul Garibian leads M&T Bank's new startup Nota.

A growing team of technologists has been gathering in the Thomas R. Beecher Innovation Center.

The group is testing a digital banking solution – a mechanism for attorneys to reconcile their complex ledgers each month – with customers.

This is a startup, just like you’d expect. But it’s like none Buffalo has ever seen. That’s because the company, Nota, was created by M&T Bank.

It’s the first in a series of innovation-minded efforts for the bank, said Michael Todaro, head of enterprise transformation at the bank.

There are more to come.

“We’ll start during 2020 to do new innovation sprints where we’ll come up with hypotheses and opportunities around ideas we might pursue,” Todaro said.

Nota serves several purposes for the bank. For one, M&T executives surveyed the fintech landscape and found startups that had created highly specialized products – essentially digging deep into solving one specific problem.

Todaro said bank officials thought they could use their expertise and financial resources to successfully compete in that field.

“We’re building a competency around creating a company that is customer-focused and solves a specific issue,” Todaro said. “We don’t think that should be the exclusive domain of the fintechs.”

For another, bank leaders believe their famously risk-averse industry has something to learn from the fast-moving, risk-taking world of tech startups. The effort is being led by Paul Garibian, who was recruited this year to serve as Nota president.

The startup has been consciously sited outside of M&T’s existing real estate, as a way to emphasize Nota’s novelty and independence.

Nota has about 10 employees and will likely continue to grow, Garibian said.

The project is still young but he said the bank’s leadership has been pleased with the product’s performance and early customer feedback.

In one notable anecdote, M&T’s risk group traditionally reviews a product after it is finished, then sends its issues back to be solved.

But with Nota, that same group is now involved in product development as it is happening.

“They’re not waiting until the product is done to render their opinions,” Todaro said. “They participate more, and it creates a lot less work.”

Nota isn’t happening in a vacuum.

Banks across the U.S. are investing in technology on the presumption that it will be an increasingly powerful force in the industry.

M&T is creating a Tech Hub office space in 11 upper floors and a pair of western plaza wings in Seneca One Tower - part of the skyscraper’s $120 million rehabilitation – that will house thousands of bank technologists, including a plan to create more than 1,000 tech jobs.

M&T engaged Boston Consulting Group to help with the creation of Nota, but BCG’s work has been completed.

Nota doesn’t quite operate like a distinct company, but it does have its own specific development and financial benchmarks. Pending renovations, the startup plans to take over the space recently vacated by 43North at the innovation center.

Todaro said the investment in creating the project is a “bite-sized risk” relative to M&T’s overall breadth.

While Todaro said the bank is excited about Nota’s potential, there is also value in the pure process of trying something new.

“We’re testing and learning, which is a big part of the whole innovation process,” he said. “We don’t expect all those learnings to be, ‘This worked great.’ We expect that some things won’t work well and we’ll need to take a different tack next time.”

This article originally appeared in Buffalo Business First.