After years spent selling to banks, Minnesotan launches his own

After years spent selling to banks, Minnesotan launches his own

Hilgert, Jackie

Peter Alworth, the 43-year-old chairman of Great Northern Bank, isn’t ashamed to admit that early on he thought banking was boring. Alworth was 23 at the time, cutting his banker’s teeth in a manager trainee program at Iowa’s Merchants National Bank. But rather than abandon the industry at the beginning of his career, Alworth stifled his yawns and stayed to learn. After shuttling through several departments from systems to lending, he settled into marketing where he found the one thing he’d been looking for since joining Merchants – a path out of banking and into a venture of his own. That business eventually brought Alworth, a North · Western Financial Review Rising Star in Banking, back to the industry he now describes as “a whole lot of fun.”

“We were having the age old problem of understanding the customer, not just the account that existed,” Alworth recalled. He’d been boning up on marketing trends and discovered what he really needed hadn’t yet been invented. Alworth turned to Merchant’s colleague and friend Tom Ronnfeldt who worked in systems, for help. “What I really need,” Alworth told Ronnfeldt, “is a big database with all the customers, all the accounts they own and all the transactions they’ve ever done.”

Ronnfeldt considered the challenge, then set to work creating a program that could extract that information from the core processor. “It was pretty effective,” Alworth boasted. The bank used the database to sell, sell and cross sell. “Then we thought, ‘we’re not the only ones who need this,'” Alworth said.

So, armed with a prototype and a good idea, the two men quit their jobs at the bank, moved to Minneapolis and formed Worth Information, a software company at the leading edge of customer relationship management. The men funded the start-up themselves. “The bankers we went to early on kind of laughed at us,” Alworth said.

Alworth spent the next several years racking up miles on his car as he pitched the Oracle-based software to small and medium-size banks achieving moderate success. When a big east coast bank pursued their product, Alworth and Ronnfeldt realized they had gone after the wrong size banks to begin with, retooled and refocused their sales effort toward the largest banks in the United States and abroad. At one point, information from more than 60 percent of the population of Canada resided on one of Worth Information’s databases. In seven years, Alworth’s company went from an unbankable idea to a $5 million concern; in 1995 he merged it with a California firm six times larger and 14 months later, Oracle acquired the company and folded the product into its suite of offerings.

Retired while still in his 30s, Alworth faced a career challenge: “I wanted to create a company that sold things to businesses – not to consumers – to businesses, that didn’t require me to travel.” Considering those parameters, Alworth decided banking might be a good choice for his next business venture.

Friend and former banker, Dave Cleveland of the since-acquired Riverside Bank in Minneapolis, told Alworth if he was serious about starting a bank, he needed to meet Paul Ederer of St. Michael, Minn. Ederer had been the president of Highland Bank and had recently left that position after 25 years; he was working in commercial real estate when Alworth met him.

“Paul and I talked about starting a bank and we agreed that St. Michael would be a good location,” Alworth said. The men agreed that experience “across the desk” taught them there were better ways to run a bank. They cast about for qualified managers and even offered the job of president to a couple of candidates. But none of the bankers they talked to wanted to take a chance on a de novo.

“Paul knew he could help but he wasn’t interested in going back into banking,” Alworth said. After about a year-and-a-half of talking and getting nowhere, Alworth began to look at other business opportunities. Then Ederer changed his mind. The application to charter Great Northern Bank went into the state late in 1998 and the bank opened in 1999, the second de novo charter of what soon became an epidemic of new banks in the Twin Cities. “We’ve been changing fast and growing at about $1 million a month for five years.” Today the bank has assets of $65 million and employs more than 20 people.

Alworth gives Great Northern’s president, Paul Ederer, credit for much of the bank’s success. “I came in knowing nothing about banking,” he said “I spent my years selling to bankers and when they didn’t buy from me I thought they were really dumb.”

The chairman still considers himself a salesman. “In banking, you sell everyday,” he said. “But what really matters is not your ability to sell and make promises, it’s the blocking and tackling of everyday banking because you simply can’t make mistakes.”

What makes a bank and a good reputation, he added, isn’t the selling at all. “It’s the delivery on the promise after the sale.” In banking, Alworth found a business with more stability that isn’t as exciting or exhausting as software sales. “I have different priorities,” he added. “It’s fun. We have a great group of people, and really nice customers.”

By Jackie Hilgert

Copyright NFR Communications Inc Jun 15-Jun 30, 2005

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