Entrepreneur, Tech Innovator Becker Leaves His Mark on Credit Union Industry

INDIANAPOLIS – For a guy who graduated college as a Political Science major and was banned from his first computer class for knocking over a computer out of frustration, David Becker has done pretty well in the technology arena. Becker of course is the entrepreneur who created credit union core processor re:Member Data Services, which he recently sold to Open Solutions, Inc. for $20 million. Some may remember that Becker also created Virtual Financial Services, a very popular Internet banking vendor for credit unions in the late `90s that he eventually sold to Digital Insight for $52 million. So what’s it like to start something from scratch and sell it off for millions? Becker got the first taste of that with DI in 2001 and it wasn’t all champagne and caviar. “We do things a little differently here in the Midwest. With most folks, if you have a $50 million sale, you have a great time with steak dinners and champagne. My wife absolutely hates having dinner late. If it’s past 7:00 I’m on my own for dinner. With DI being on the West coast, it wasn’t until about 8:30 I was able to call her. I was sitting at a drive-up lane in Burger King grabbing a burger and fries. I called her on the cell phone and said `hey honey I closed a $50 million deal’,” said Becker. Becker said the money is nice, but he’s in it for the business pursuit. He loves to create something that helps organizations work more efficiently. Becker, 50, isn’t done with business. He still runs five other companies, ranging from cell research to credit/debit card processing (see related box on this page). His start with credit unions came in 1981 as a senior consultant with the Indiana Credit Union League. It was actually a failure of sorts there that started Becker on his entrepreneurial path. “With deregulation in the latter part of 1979, credit unions had all kinds of powers, but no tools to work with. In the late `70s and `80s most of the data processing for credit unions was through large banks and insurance companies,” said Becker. Becker got himself in a little bit of trouble with the league by criticizing the league-endorsed data processing services as not being competitive and not having enough feature functionality. Mort Jester was the CEO of the league at the time and he challenged Becker to go out and find a better alternative. He said he might give Becker a chance to run the DP show if he put things together. Becker thought he found a winner in Grand Rapids, Michigan-based WESCO (the DP processor today known as CU*Answers). Don Sharp was the CEO of WESCO back then. Becker made the presentation at a league board meeting, laid out the business plan and that’s when the trouble started. He said the meeting became bogged down in how the League should run the service, whether as a league service corp. or internally, etc. “I literally stood up, whistled a time-out, and said `I’ll solve the problem. I’m just going to do it.’ I walked out of the meeting, cleaned out my desk and called Don Sharp,” said Becker. He asked Sharp to wholesale him the product for him to sell in Indiana. The rest as they say is history. The very next day he called the lawyers and created the company. The early days were tough. “I was a one man show when I launched from the trunk of my car and a spare bedroom of my house,” said Becker. He said he would only call on credit unions in a 150-mile radius so he could make it there and back in a day. “We really started cruising in 1982. We jumped up to five employees and had close to a dozen customers.” RDS ran the WESCO system from 1981 to 1989. In 1989 RDS acquired Custom Computer Applications, a division of Travelers Express. The acquisition was a bit like the mouse swallowing the tiger because CCA had more than double the annual revenues RDS had. RDS started running CCA’s cuStar as its core system and it has ever since. Of course it has revamped the system completely over the years to now where it is surrounded by an XML wrapper, is Windows-based, runs in in-house and service bureau mode, and is starting to incorporate Microsoft’s .NET. The year 1982 was important for other reasons too. Link FCU CEO Bill Kirby loaned Becker the money for RDS to buy its first NCR mainframe. “This allowed us to cut the umbilical cord with WESCO and build a data center here to start doing all our own processing,” said Becker. Link FCU is still an RDS client, and Kirby is still the CEO. Credit unions were also getting into share draft processing, which RDS started to offer. One factor that helped RDS grow in `82 was Merchants Bank in Indiana, which provided DP services for most credit unions in Indiana, announced that it was getting out of the business. It sold off that part of its operation and it forced credit unions to take a look at other options – RDS was ready to pounce. “I anticipated when I started the company that some year we would do a million dollars in sales. We did it in the second year,” said Becker. Becker says the RDS system can be as open as it needs to be. He said the whole focus on “openness” in the credit union industry is a little overkill. “I would argue with the cuStar database today and XML wrapper around it, you can get as much info out of it as an Oracle database,” he said. Concern in the industry about open systems and other new trends played somewhat of a role in the decision to sell RDS. Becker said with a lot of CEOs leaving, there’s going to be a changing of the guard and their perceptions about technology are going to drive sales. “There’s a lot of pressure in the industry. Everyone knows Microsoft. They want shrink-wrapped products, they want industry standards. We had to get there eventually,” said Becker, and now RDS can get there in a matter of months as opposed to two or three years. Interestingly, cuStar still incorporates a lot of PASCAL code, a computer language not even taught in the U.S. any more. “It’s probably still 60 to 70% of core code written in PASCAL. If you were able to see our R&D team for cuStar, we have a lot of Russians and Chinese. This language is still being taught overseas,” said Becker. Becker said he also started to worry about the future of RDS should something have happened to him. “After 23 years, I was still the visionary. If I’d gotten into an auto accident, it’d be a pretty tough hole to fill,” he said, noting the company would probably be forced into some type of merger, whereas with OSI RDS was able to merge on its terms. As for industry firsts, one Becker is very proud of is his bet on real-time ATM processing. “We wrote a real-time ATM interface for the old Indianapolis Teachers Credit Union. It was the first real-time ATM in the state of Indiana,” said Becker. He said some people thought he was crazy thinking ATMs would go real-time, and now of course the whole EFT world is evolving to real-time, even checks. The EFT arena is one place Becker hopes to offer some new functionality for credit unions. His AmeriCard Services firm, which offers real-time pass-through card processing and enables credit unions to tailor their card programs to individual users, is on the rise. Becker said credit unions should not be selling off portfolios the way they have. In fact he’s offered any of his AmeriCard clients a higher price for their portfolio than say the MBNA’s of this world, because he knows portfolios can be big money makers if run correctly. Running down Becker’s technology dossier wouldn’t be complete without looking at his First Internet Bank of Indiana, a $375 million online bank he started in 1999. The bank has 30,000 customers spread over all 50 states. It is very lean by any comparable $375 million institution with just 26 full-time employees and 6,000 square feet of office space. He said if someone were to walk into the lobby of First Internet Bank of Indiana they’d find a six by eight counter (no secretary) and a phone where employees can be reached. When the bank first launched the average customer was male, 50 or older, income north of $75,000 and credit scores of 725 or better. Over the five years, that snapshot has come down, however it’s still pretty close and one differentiator with other banks is First Internet Bank of Indiana customers keep double the national average balance in their accounts. Becker said the Internet bank was a real thrill for him because it incorporated all the tools he had built with VIFI and RDS and put them into action. More than $70 million in funds flows into the bank every month, with more than half coming in via ACH, and a lot through the ATM. He said his credit union friends kidded him about moving to the dark side when he started the “bank”, but he describes it as a bank with credit union philosophy. For example, the bank provides live customer service from 8 a.m. on the East coast to 5 p.m. on the West coast, and six hours of service on Saturdays. Looking back over his career, Becker said there’s a lot of irony to go around. For starters in college he was a Political Science major who didn’t show much promise for computers – he was tossed out of his first computer class when he got frustrated with an old key punch machine, and knocked it off the desk. He was thrown out for good and had to hire some of his fraternity brothers to help get through the class. Becker had aspirations of going to law school, but instead wound up in General Electric’s credit division. He stayed there three and a half years before hitting the ceiling. He then landed his consultant job with the Indiana league. He thought he would do that for a while and then “get a real job.” He was intrigued and excited by what was “called a movement back then.” Becker said he was one of the first credit union people to go to the big Bank Administrative Institute show (today called BAI’s Retail Delivery Conference). It was there he could really see how unique credit unions were. He recalls a story of stopping by the IBM booth looking over the shoulders of some IBM sales reps and they’d just panic that he was out to steal something. At credit union shows, he saw leaders sharing new ideas and successes -that’s the difference that attracted Becker. As the head of five companies, there’s not much leisure time available, but Becker enjoys spending any chance he can with his wife Christy and his five children, ages three, six, seven, eleven, twelve and twenty-one. Becker has a passion for cars and photography. He started taking pictures in earnest in high school. In fact his high school year book is mostly full of shots he took. Becker said he hopes he’s not ostracized from the credit union industry as he still has a lot of friends and not to mention ideas. “I’m not going to retire and sit on the beach. I have a headful of ideas.” -