Prospectus: Banking, finance and technology

Many businesses hunkered down and curbed their spending, unsure of what lay ahead. When they did spend, they were strong in liquidity and had less need for the loans that banks count on to deploy deposits and generate income.

"A lot of people got the much-needed PPP funds," said Michael McMahon, KeyBank's Buffalo market president and commercial sales leader. "Some needed to deploy it right away. Some were able to keep the companies going but didn't necessarily need to deploy it right away. Maybe they had other forms of liquidity.

That's left banks holding a lot of cash – more than they prefer. So they're looking to lend.

As of late last year, deposits at commercial banks across the United States had soared to nearly $18 trillion. That was up 33% from $13.5 trillion in March 2020, just as the pandemic was striking the U.S. economy.

The challenge for individual banks is to find ways to deploy those resources.

"We're doing as many loans in the community as we can, and we've hit the gas pedal there," said David Nasca, Evans Bank's president and CEO.

Evans also sees a need to invest in other securities, such as bonds, to strengthen the bank, Nasca said.

Bank on Buffalo's deposits have soared to $1.2 billion. But it's aiming even higher, with the goal of reaching $2 billion within the next few years.

As part of that quest, Bank on Buffalo keeps adding branches and has increased the size of its commercial lending team.

"I think that has exemplified the growth and put it on hyperdrive," said Michael Noah, the president.

Bank on Buffalo was set to open a branch in the Northland complex early this year, and plans to add a branch in Lancaster by year's end.

While some banks are adding branches, and others have continued to scale back, the Buffalo area's banking landscape didn't change much last year.

M&T Bank still captured the greatest share of deposits in the market, followed by KeyBank. But there weren't any shakeups along the lines of Key acquiring First Niagara Bank several years ago. M&T was awaiting the green light to complete its acquisition of Connecticut-based People's United Financial, which will expand its reach throughout the Northeast.

When it comes to putting deposits to work through increased lending, the dynamics might be changing for banks this year.

The worker shortage could drive some of that spending. As small manufacturers face the reality of older workers retiring – and not enough younger workers ready to take their place – they might invest in automation as one way to fill the gap.

Businesses may feel more confident this year about making capital investments in their operations, or making deals to acquire other companies, McMahon said.

"It's the need to start spending for the future," he said.

A robust startup economy can pay dividends. Investors – often from outside the region – are drawn to promising business ideas and pour in dollars. Growing startups create jobs and create a spinoff effect, from business services they need to buy.

And if a startup is sold or goes public – think ACV Auctions – the founders can use their newfound wealth and launch more ventures, and start the cycle over again.

It's a model that proponents of the startup economy want to see take hold here. In some cases, the companies are homegrown. But the region has also attracted tech firms that have either moved or expanded here.

Here's a look at four companies that are growing in Buffalo. They have identified advantages they found here – a lower cost of living, an ample supply of talent, to name two – that they say enables them to operate here, instead of in a tech hotbed like Silicon Valley: 

Centivo

Last year, the digital health plan moved its headquarters to Buffalo from New York City. Perhaps that shouldn't have been a surprise.

Centivo's co-founder and CEO, Ashok Subramanian, is a local native, and the company already had a robust operations center in Cheektowaga. Plus, Subramanian had a track record here through Liazon, an employee benefits exchange operator he formerly led.

Subramanian has said the Buffalo area has a good talent pool, work ethic and education system – all of which make the region a good place to expand. Centivo has added office space at the University at Buffalo's Gateway Building on the Buffalo Niagara Medical Campus.

And Centivo has the funds to support its ambitions. The company recently raised $51 million from investors, on top of the $34 million it raised in 2020.

This year, Centivo has its sights set on expanding into an additional U.S. markets. The need to support that growth is helping fuel its hiring in places like the Buffalo area.

Centivo has 216 employees, 63 of whom are based in the Buffalo area.

Rural Sourcing

The Atlanta-based firm prefers to expand into cities that are outside of the nation's tech hotbeds. Late last year, Rural Sourcing opened a location in Buffalo.

The company markets itself to clients as an alternative to using offshore providers for software development, or relying on expensive on-site consultants.

Rural Sourcing is starting out in the HANSA coworking building and plans to move into a permanent downtown home sometime this year.

In recruiting, Rural Sourcing aims to hire people from all kinds of backgrounds – whether college-trained or not – and offers a workplace culture where employees can be themselves, said Natascha Thomas, the Buffalo development center director.

"We promote a work life-balance which is not common in the tech industry at all," Thomas said.

The company likes the results it has seen operating outside the traditional tech markets. At the same time it disclosed its plans for Buffalo, the company announced it would also open a location in Baton Rouge, La.

Rural Sourcing aims to grow to 150 employees within three years in Buffalo.

AML RightSource

The Cleveland-based company, which helps banks and other companies spot illicit transactions, has established a strong foothold in Buffalo and plans to get bigger here.

Last year, AML moved its Buffalo operations to the 27th floor of Seneca One tower from Larkinville. The firm has found a good talent pool to hire from, said Frank Ewing, the CEO.

"Everything that we thought Buffalo was and could be, has turned out to be true," Ewing said.

Through a series of acquisitions, AML RightSource has broadened the tech-enabled services it offers to clients. 

Ewing said it's an exciting time for the company to be downtown, with developments like more people moving into apartments and new a grocery store opening up.

"I think the more people see things happening, the more risks people are willing to take, and it just creates this energy on its own, and we can be part of that," Ewing said.

Ewing, who is a Utica native, splits his time between Cleveland and Buffalo. He graduated from the University at Buffalo's law school, and began his career working for HSBC in what is now Seneca One tower.

AML RightSource has about 150 employees in Buffalo.

Kangarootime

Scott Wayman brought his child care software business to Buffalo from California after winning $500,000 in prize money in the 2017 43North competition. Long after his one-year obligation expired, he has kept the business here.

The startup recently raised $6 million from investors. The capital came from a fund led by Buffalo native Lauren DeLuca, but included investors who didn't have ties to the region.

"I think it proves that there are great companies being built in Buffalo and that the talent stack here in Buffalo continues to grow and mature as the ecosystem grows," Wayman said.

The $6 million in investment included $300,000 in follow-on funding from 43North, a vote of confidence in how his company has performed here.

The new funding will help Kangarootime staff up as the business itself scales up.

As consolidation continues in the child care industry, Kangarootime's software is well suited to those clients' needs to manage multiple locations, he said.

Kangarootime has 39 employees, about 25 of whom are based in Buffalo. He's aiming to grow the company's job total to 100 by the end of 2022.

Now he advocates for making Buffalo an appealing place for tech workers and other recruits, through new assets like the tech hub in Seneca One tower and playing up the region's strengths, like its cost of living and higher-education system:

Q: Buffalo's population has grown for the first time in a long time. What opportunity does that bring?

A: If you think the theory of what we're trying to accomplish is creating a place that is attractive, that's a really good sign. 

Think about the attraction of companies, and what comes with that. You think about the mission that we're on with M&T and our hiring and bringing a significant amount of the more modern tech workforce, but not exclusively tech, into Buffalo. I think all those things are contributing. I think this is a place that is starting to show up on the map.

I have a theory, and I don't know how useful this theory is. On the one hand, we look at the talent war that we're in. And we stare at one of the components, which is lots of companies are so starved for talent, that you can work anywhere. 

And many of us – I am definitely in this category – feel like the winners in the future are going to design teams that have the mission that we have, that are part of the community. And I think the proximity to others is going to be an important differentiator.

My theory is, I think that while locally we feel like we're losing talent, I think that we might be in this competition losing it to companies but not losing it to the region. I think folks are taking advantage of the fact that they can work from different places without the move.

I think that in the near term, that feels like a real painful thing. But I think in two to three to four years, we're going to experience this feeling that there's more talent available as we create this place that's relevant for those who might have left a company, but didn't leave the area and want to be back in that kind of community setting, the things we're building here.

I think ultimately, human beings, particularly the creative class – those of us who are solving problems that we don't know yet, who have to huddle around them in order to be most effective – are going to figure out that being in proximity to each other, being in a place that's conducive being around others who are solving the same types of problems, is a differentiator.

It's hard right now for us to maintain that conviction because of the tension that currently exists.

Q: You had to be persuaded to move here. What won you over?

A: On paper, it wasn't an obvious career move.

[While being recruited] I came up here up like six or seven times. One time I came, I didn't even tell anybody. I didn't tell [chairman and CEO] René [Jones].

I stood in the middle of Main Street in February, which is not prime recruiting season around here, and I just kind of looked around. Because I was asking myself the same question that people who cared about me were asking, which was some version of, "What are you thinking?"

And I'm looking around Main Street, in 2018 in February, and I'm like, what's going on? Why do I feel compelled to come be a part of this community? Because if you measure the things that are tangible and you can calibrate across this community, there's no bustling downtown, you don't see billboards with software companies up like you do now.

Those are the signals that, when we're trying to attract somebody who's been living and working and their experiences are those types of things, that we just weren't sending. 

For me, it was about, can I go below those types of tangible-measure things?

It's like, do you want to be part of a tribe that's on a mission? Do you want to be part of something bigger than yourself? Do you see the kind of opportunity in taking the gifts and experiences that you're just lucky to have, in my case, and apply them to a different context? Is it screaming at you like, "This will immediately be applicable, and can you make a difference?"

Those were really the questions that made the difference for me. I was sitting in D.C., surrounded by tech companies and big banks and they're throwing all kinds of money around – not just for me personally, but you have at your disposal the kind of assets and wealth inside a company that can solve the biggest problems at the biggest scale in any way you want.

But an individual can't make a difference in D.C. like they can make a difference in Buffalo.

We're starting as a community being able to pull in folks who had choices just like I did. Their ledger is starting to look a little bit better because we're sending some of those signals.

Q: You talk a lot about a race for relevance. What does that mean?

A: If you think about the successful ecosystems or communities that are already on this journey, I think what you see are these concentric circles of communities. 

The people at the center are the highest risk takers, the real entrepreneurs. There's a lot of volatility, there's some success, but there's a lot of losing. It's just the nature of the beast.

You've got to have that hot core and it's got to be supported by the things around it. It's got to be a place where they can find talent, it's got to be a place where they can find capital, it's got to be a place where they can create a runway for the company. But that's got to be healthy. Ours is healthy.

But around it needs to be a place that's supporting it. You need small-, medium- and large-sized institutions around it that have an appreciation for the risk and the environment that's in there. We're supporting them, bringing to bear assets that help them be successful. But there's also this kind of life cycle that happens.

There's a lot of failure in there, and that failure needs a place to go. A founder starts a company. … The majority of them don't work, they need a place to fall out and continue be able to survive.

Oftentimes, what you see in these communities is, a founder has an idea. The idea doesn't work. They have to be able to fall back into the community, go work for an M&T, go work for somebody. They'll get back to the center if the ecosystem is supportive and healthy.

Q: What about developing talent already here?

A: Four-year universities aren't going to solve that problem for us. That's not a criticism of four-year universities. We need to think about the skills that it takes to be part of a modern, technical services based company as the 21st century blue collar trade.

And we need to think about how we create talent in the same way that we think about that.

In many ways, it's staring right in front of us. We've got to think about apprenticeships, going into communities who in the technical area, are just simply underrepresented for a million different reasons, and plant those trees that are going to take a long time, but they need to be a part of this.

From the Five Points neighborhood, Owunwanne began an educational and career journey that ultimately led him back to Buffalo. After graduating from SUNY-Geneseo, he worked for a hedge fund for 10 years. Then, he earned a master's degree in public administration from the University of Pennsylvania and took a series of jobs with the Pennsylvania state government.

In 2019, Owunwanne came back to Buffalo for a position leading the University at Buffalo Regional Institute's East Side Avenues initiative. His passion for community and economic development recently led him to a new role, at KeyBank: corporate responsibility officer and community relations manager for the bank's Buffalo, Rochester and Eastern Pennsylvania markets.

Owunwanne, 41, talked about his life's journey and the opportunities he sees to help keep Buffalo's neighborhoods intact by training more people in commercial development.

Q: What does it mean to be corporate responsibility officer?

A: At the core of it is me being able to elevate the voice of the community within KeyBank, and also be the voice of KeyBank within the community. 

Those voices can sometimes be loud, boisterous. And to some degree, I understand, because the relationships with banks over the decades, the history, is full of some promises – some kept and some broken. To some degree, the bank itself creating the opportunity that would allow those voices from the community to be heard, I think that's a wonderful thing.

Q: You grew up in Nigeria and moved to Buffalo. How did that come about?

A: My parents came here back in the '80s when the University at Buffalo had a robust student visa program. (My father) came here to finish his education.

My grandfather, who ultimately raised me, he believed in the power of education, what an education can do for a people. And growing up in a small village in Nigeria, with less than 2,000 people, being educated was something he himself did not have an opportunity for, but he understood the value in it.

So he decided to pave the way to ensure his sons were able to come here and educate themselves. The plan was for them to come here and educate themselves, acquire some knowledge and bring it back home to help lift the village. Unfortunately, that did not happen. My parents, along with three of my uncles that came, they never went back.

My grandparents raised me, and I did not know my parents. I met my dad when I was 9, and my mother when I was 12. I just came here to Buffalo and had an already-made family. I have two younger siblings who were already here in Buffalo.

Q: After graduating college, you worked for a hedge fund. What did you take from that experience?

A: It was certainly an opportunity that I very much cherish until today, because it gave me an exposure to something I don't think I would have had an opportunity to do.

I bought my first house in 2011, so I was doing very well for myself. However, the Black and brown communities, especially the ones that surrounded the office, which was Trenton (N.J.), they were not doing so well.

Sort of watching all of that unfold had a profound impact on me and what I wanted to do with the rest of my career. 

Q: After earning your master's degree, you worked for the Pennsylvania government in economic development. What impression did that make on you?

A: As I was traveling the state monitoring and closing grants, it afforded me the opportunity to witness how some of our most cherished communities were just hollowed out as a result of people just fleeing those places into major cities. It just deepened my passion for community and economic development.

Q: When you were program director for East Side Avenues, what did neighborhood residents say were their priorities?

A: One of the most profound things that I did hear was, there were a lot of East Side residents that owned commercial properties, perhaps passed on from a family member or that they bought when they were just 19 years old and held onto to.

What I heard was there were folks coming in and knocking on their doors, wanting them to sell those properties. And that, to me, was a challenge, or an issue, in that this is how, essentially, displacement starts to happen. This is how gentrification comes into communities. We thought that we should do something about that. 

We ultimately came up with the Community-Based Real Estate Development Training Program. It's simple, but it's impactful. It's basically an adult education that teaches folks who own commercial properties the nuts and bolts of commercial real estate development. The idea behind that was, if we were able to essentially build a bench of citizen developers, they then can be the drivers of the economic development within their communities.

I recognized the great impact that it could have in the community, in terms of keeping the fabric of the neighborhoods intact, and also building a bench of Black and brown people in an industry space in which you often don't see Black and brown people, which is real estate development.

Q: How will you measure success in your job?

A: A measure of success is something I'm still essentially trying to figure out. But I will tell you one area I'm incredibly focused on. Given all the federal packages that we're hearing about, I feel that this is a great opportunity – just removing KeyBank from the equation for a second – to provide financial wellness and education to low- and moderate-income communities.

As far as Key's concerned, this is something we've already started doing at the Delavan-Grider branch. We had put out almost $50,000 in grants for small home repair, windows, things like that. Those are areas I would really, really want to double down on.

Part of the problem in (low- to moderate-income) communities, especially the ones that are Black and brown people, is the valuation of property has always just been depressed. By doing some of these little repairs, we can certainly see an appreciation in home values.

We know that home ownership is one of the levers to wealth creation in this country. We know that by having a home that you own, you can leverage that home to send your kids to school, for a loan to start a business.

By doing some of those small repairs, we can ensure that home values are right, that the values keep going up with those repairs, so that folks can leverage those homes to further themselves economically.