Madrona backs WaFd Bank spinout developing consumer software for regional banks

From left: President Dustin Hubbard, Developer Kateryna Masiuk, Production Support Vlad Vasic, Automation Tester Varsha Chaurasia, Solutions Architects Sreedhar Pamidiparthi and Prasad Mandadapu, Technical Product Manager Victoria Kruse, and Developer Clint Bush. (Archway Photo)

Key Takeaways

  • Archway, spun out of Washington Federal (WaFd), provides digital banking infrastructure to regional banks.
  • The Seattle-area startup raised $15 million in a round co-led by WaFd Bank and Madrona Venture Group.
  • The goal is to help community banks stay competitive with giants like J.P Morgan, Charles Schwab and Bank of America.

A new banking software startup spun out of Washington Federal Bank (WaFd) wants to help digitize consumer-facing products used by regional banks across the U.S.

Archway has a unique founding story, originally starting four years ago inside a WaFd in-house development team called Pike Street Labs. The idea was to help develop and deploy new software at a faster rate.

WaFd, a 105-year-old publicly traded firm that operates more than 200 branches in eight states, realized that thousands of other banks needed similar technology help. So it spun off the entity and incubated it at Madrona Venture Labs, the startup studio associated with longtime Seattle venture capital firm Madrona Venture Group.

Now named Archway, the company on Tuesday announced its $15 million Series A round co-led by WaFd and Madrona.

“One of the things that has become painfully apparent to me is how woefully antiquated technology is in banking,” said longtime WaFd CEO and President Brent Beardall, who recently returned to the bank after surviving a small plane crash. “It just doesn’t work very well.”

Archway plans to sell a white-labeled banking tech solution with features similar to those of large financial institutions.

“This is a platform that allows any of these banks to be at feature parity with the biggest banks in the world,” said Madrona Managing Director Steve Singh, the co-founder of Concur and a board member at WaFd. Singh will join Archway’s board of directors as a result of the funding.

Archway lets banks integrate their core banking products with modern web, mobile, voice and artificial intelligence tech. It offers the ability to build dashboards with consumer financial data and call center technology that uses voice recognition for customer authentication.

Archway plans to include integration with budgeting and forecasting applications such as Quicken or Microsoft Dynamics to provide financial product recommendations for customers.

Banks are traditionally constructed on legacy platforms such as FIS, Fiserv or Jack Henry. Switching to a new platform can be considered a “massive risk,” Singh said. Many banks are hesitant to make a transition from their current software provider.

Archway developed its tech to operate as a layer on top of those platforms, helping the startup compete against competitors, Singh said.

Developing financial tech within the confines of U.S. banking regulations can be difficult to navigate for startups. But because Archway was originally developed at WaFd, it has a “deep appreciation” for how banks are actually run, said Singh.

He compared the strategy behind Archway’s approach to nCino, a cloud banking software provider that went public after being spun out of a regional bank in late 2011. The company’s current market capitalization is about $3 billion.

Archway’s only customer is WaFd but aims to add at least one new customer by the end of this year.

The startup is led by President Dustin Hubbard, former CTO at WaFd Bank and American Family Insurance. Tad Neeley, who worked at San Francisco-based Banyan Infrastructure, is vice president of business development, and Todd Tower, formerly a SVP & Global Head of Cloud Services at SAP, is chief customer officer. It has a team of 22 employees.


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