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Washington Federal spun out its digital innovation unit to help other regional banks work with tech firms more easily.  

Washington Federal wants to help other banks partner with fintechs, so they can better compete with larger rivals – and it’s the latest financial firm to bet that its homegrown tech tools will reel in external customers. 

Washington Federal – known as WaFd Bank – launched a separate firm to help other regional and community institutions create more consumer-friendly digital experiences.  

Washington Federal originally created the unit, now dubbed Archway, to advance its own tech goals, but realized that its learnings and tools could have a wider industry impact. Archway’s platform makes it easier for banks to consolidate data from disparate systems and build or integrate other apps, like budgeting tools, voice chat, or AI.  

Ultimately, this service helps smaller regional banks more easily up their tech chops, so they can offer the experiences that customers expect from national competitors with bigger innovation budgets.  

“Archway provides a platform that hooks into the services these banks are looking for, and the team has the experience to know the roadblocks – technological and cultural – that need to be overcome,” president Dustin Hubbard told Insights Distilled. “Other solutions are agnostic of industry and most community and regional banks don’t have the inhouse development expertise to effectively deploy them.”   

Archway just announced $15 million in funding from WaFd, as well as venture capital firm Madrona.   

There are two trends at play here:  First, the need for abstraction layers to help banks take advantage of cutting-edge tech (similarly, a firm called Sandbox Banking just raised seed funding to be the Stripe of fintech integrations). Second, financial firms’ growing realization that the highly specialized nature of their software means they can successfully sell it to other banks.  

For example, ING recently spun out its homegrown regtech software, Banco Santander is partnering with Google to sell technology it created to help move mainframes to the cloud, and Capital One productized Slingshot, software it originally created to manage its own use of the cloud data tool Snowflake.