Matthew P. Lawlor: banking at home, leadership on the floor

Matthew P. Lawlor had a curious way of occupying the executive suite: periodically, he left it to answer the telephone. At Online Resources, the banking technology company he co-founded, he took incoming customer calls about once every six months. The people who ordinarily did the job were better at it. He was quite prepared to say so.

Earlier, at Chemical Bank, he had worked as a teller at a Manhattan branch on Fridays. Handling the accounts while remaining agreeable to customers proved a less effortless combination than an executive might imagine. An impressive title offers surprisingly little assistance when the till refuses to balance.

“Connection is the key in building teamwork,” he said. It is a modest sentence to carry through a career involving satellites, international investments, the White House and banking patents. But it gives the career a human scale. Lawlor’s recurring subject is how people and systems work together, and what happens when they do not.

“Connection is the key in building teamwork.”

Matthew P. Lawlor

An engineer learns the banking business

Lawlor began at RCA in 1970, working on recording systems for NASA’s Earth Resources Technology Satellite. The assignment put him inside an engineering problem long before he became associated with financial technology. Information had to be captured and made useful. Eventually, his working world would exchange the satellite for the bank account.

His education joined a mechanical engineering degree from the University of Pennsylvania with an MBA from Harvard Business School. At Chemical Bank, he headed a consumer banking division and later directed its international investment company, managing overseas banks and joint ventures. He had experience both with the customer-facing institution and the financial relationships behind it.

In 1980, he became a Presidential Exchange Executive, a nonpolitical appointment that took him to the White House and the Office of Management and Budget. His service spanned the Carter and Reagan administrations and the presidential transition of 1981. An incoming administration is an organizational handover with rather more spectators than most.

Afterward, he formed US Multitrade, a venture development business that financed early technology companies, including RSA Security Dynamics. Engineering, banking, government and venture development were already on his résumé when he co-founded Online Resources in 1989. The familiar label “banking executive” conceals a fairly restless itinerary.

A bank at home, a network behind it

The opportunity involved a gap between what smaller banks’ customers wanted and what those institutions could readily build. Customers wanted access from home. Creating and maintaining the machinery for that access was another matter. Online Resources offered institutions a way to buy the service rather than construct an entire operation themselves.

By January 2000, its work included running online banking for F&M Bank-Northern Virginia and hundreds of other small financial clients. There was transaction monitoring, round-the-clock customer support and even help promoting the service. F&M’s initial investment was $5,000, followed by monthly charges. A community bank could offer useful online functions without acquiring the budget of a banking giant.

Part of the approach used existing ATM networks to connect customers at home with their accounts. The physical cash machine was only the most visible use of a network that could do other work. Online Resources put that infrastructure to use for remote banking and payments. It was an entrepreneurial argument for examining what was already installed.

FROM THE PRODUCT ARCHIVESCREENPHONE

The technical record names collaborators. US patent 6,202,054, granted on March 13, 2001, lists Matthew P. Lawlor and Timothy E. Carmody as inventors of a method and system for remote delivery of retail banking services. Online Resources & Communications was the assignee. The title is dry; the underlying ambition was recognizably domestic: banking without the trip to the branch.

The patent describes user terminals, a central computer and connections to financial services. That architecture helps explain why the company’s business extended beyond the screen. A convenient interface still needed a transaction to reach the right place, and a service organization to support it. Lawlor’s call-center visits occurred inside that less visible part of the proposition.

Growth has more than one column

Online Resources went public in 1999, ten years after its founding. Its customer base eventually extended to thousands of financial institutions and commercial billers. Lawlor’s later company overview describes an operation with fifteen million active users in 2009, compared with one million in 2004. That is a substantial change in the number of people relying on the service.

Expansion also involved buying other businesses. In May 2006, Online Resources announced an agreement to acquire Princeton eCom for $180 million in cash, with a possible additional earnout of $10 million. The attraction included distribution and economies of scale in payments. Buying another company can compress years of business development; it also brings someone else’s customers and their decisions into the calculation.

The 2008 results show why growth deserves more than a celebratory adjective. Revenue reached $151.6 million, up twelve percent from $135.1 million in 2007. Yet the company reported a $7 million net loss available to common stockholders. Its fourth-quarter revenue also reflected the departure of three large clients in late 2007 and early 2008. Scale and profitability were separate questions.

When the boardroom changed hands

The end of Lawlor’s tenure was contentious. Tennenbaum Capital Partners had invested $75 million in 2006 and gained a board designation right. After the company’s stock price fell in 2008 and 2009, a proxy contest brought three Tennenbaum nominees onto the board in May 2009. The founder’s authority had become a subject of open dispute.

On December 14, 2009, the board voted to remove him as chief executive. He resigned from the board on January 20, 2010. A disagreement about severance and compensation followed, eventually reaching an eleven-day jury trial in April 2011. The jury found for Lawlor on contract and unjust enrichment claims, while rejecting his wrongful-termination claim.

The resulting compensatory award was approximately $5.3 million. In January 2013, the Supreme Court of Virginia upheld the damages award, but reversed the legal-fee ruling insofar as it covered claims unrelated to the severance agreement and sent that issue back for further proceedings. Its opinion examined competing definitions of a change in control, the treatment of stock options, evidence about compensation and the recovery of legal expenses. Agreements that may look like supporting paperwork became central to the founder’s departure.

The distinction between the successful claims and the rejected one matters. So does the difference between founding an enterprise and governing a public company. Lawlor had spent twenty years building Online Resources. That history remained part of the business, but it could not settle every question about who now controlled it or what its contracts required.

One dispute turned on the meaning of a board majority when some seats were empty. The agreements defined a change in control in slightly different ways, and the parties disagreed about how to count the incumbent directors. A company’s ownership story could turn on language few customers would ever read. The court’s majority upheld the damages award; a partial dissent would have reached a different conclusion on the severance claims. Even the legal ending contained a disagreement.

Four unfinished jobs for online banking

Leaving the executive role did not end his interest in the industry. In September 2010, Lawlor set out four priorities for the next generation of online banking: authentication, integration, capacity and responsible use of data. His argument looked beyond offering another isolated feature. The services needed to fit together.

He wanted consumers to encounter consistent information across mobile devices, branches, call centers, ATMs and computers. He also argued that authentication should be free to consumers, with providers earning money through related services. The obstacles, in his account, included commercial positioning and competition over the customer relationship.

On personal data, he emphasized consumer choice, particularly opting in at the point of interaction. These were proposals made in 2010, rather than a description of today’s banking systems. They nevertheless show his attention moving between technical architecture, commercial incentives and the individual using the service. The network needed rules as well as connections.

Capacity was another concern. He questioned whether growing demand for bandwidth would strain the delivery of financial services, and considered how processing might be divided between networks and users’ devices. It was a reminder that an online bank also depended on infrastructure outside the bank. The customer’s expectation of immediate access had implications far beyond the design of an account page.

Still making connections

Lawlor’s subsequent work includes investment activity through Three Ten Holdings and strategic advice associated with Lawton House Capital. His publicly listed affiliations include the American Business Conference and Business Executives for National Security. He also co-founded Ceca Foundation with his wife, Rosemary, in 2013, and continues as its board chair after stepping back from daily operations in 2023.

His personal biography offers a small correction to any excessively polished portrait. He played varsity football and lacrosse in college, enjoys cycling and swimming, and admits that golf is less rewarding territory. It is pleasant to encounter a business résumé willing to leave one skill unimproved.

The teller shifts and telephone calls provide the more revealing detail. Lawlor spent much of his career helping banking customers do things at a distance. In managing the people who made that possible, he sometimes chose proximity. An executive could learn something by taking a seat where the work arrived, one customer at a time.