Finance & Insurance: Fintech’s Future Is Now

Biometrics, artificial intelligence and blockchain are being embraced by the financial services and insurance sectors, fueling a wave of fintech startups.


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Biometrics, artificial intelligence and blockchain are being embraced by the financial services and insurance sectors, fueling a wave of fintech startups.
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Finance & Insurance: Fintech’s Future Is Now

Biometrics, artificial intelligence and blockchain are being embraced by the financial services and insurance sectors, fueling a wave of fintech startups.

Finance & Insurance: Fintech’s Future Is Now

By the BF Staff
From the July/August 2021 Issue

FinTech solutions are widely available and use combinations of biometrics, artificial intelligence, blockchain and e-commerce. These solutions consolidate multiple banking software into a full-proof digital ERP solution. They can be used by suppliers, employees and customers to make banking faster, safer and easier.

There has been dramatic growth in FinTech during the pandemic. As the banks shut down, people largely relied on virtual financial services. Digital banking will be a new norm. With biometric, artificial intelligence and cybersecurity solutions provided by FinTech, digital banking is easier to access than ever. As more people will opt for digital banking, experts anticipate that there will be a significant decline in paper-based banking. In 2020, people grew increasingly comfortable in accessing financial services through online apps and messaging.

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Hartford, CT (Photo: Metro Hartford Alliance)

Biometric security systems are becoming widely available. A biometric security system is an effective way to ensure that customer data is protected. The next breakthrough will be contactless biometric security systems.

Blockchain technology will make transactions safer. Blockchain works on decentralized networks, so there isn’t any involvement by a government entity or other third-party. [Editor’s note: the amount of electricity needed to support cryptocurrency mining using blockchain is putting a severe strain on power grids worldwide.]

Artificial Intelligence and machine learning soon will take center stage. Forecasts estimate that AI will reduce operational expenditures by 22 percent for banks; worldwide, banks can save as much as $1 trillion by integrating AI.

HARTFORD, CT: INSURANCE, INNOVATION AND TALENT

What is it about the Hartford Region that makes it an ideal location for businesses, investors, entrepreneurs and career builders to start, grow and expand their futures? One word: Access.

For businesses and people in the insurance and financial services (IFS) industry, Hartford, CT—“The Insurance Capital of the World”—is the place to find the most access to insurance companies and industry experts making significant contributions to a global insurance and InsurTech ecosystem.

Whether you’re a large or mid-size company looking to expand, someone launching an InsurTech or FinTech startup, a mid-level executive or a recent graduate looking to build a career as an actuary, there are ample opportunities in the Hartford Region. And, with close proximity to hubs in Boston and New York City, it’s convenient to engage with those cities without paying big-city prices. In the Hartford Region, the average cost of living is 29 percent less than some of its neighboring metro cities (Source: Council for Community and Economic Research, 2019).

Smart homes, autonomous vehicles, cloud-based accounting, telehealth and telework have all become the “new normal.” The world is demanding faster e-everything and many of the solutions are being developed by Connecticut’s IFS industry—specifically in Hartford, where there is access to a large number of insurance and InsurTech and FinTech startups and incubators.

What new and emerging risks will keep insurance leaders focused on innovation as the key driver to meet consumers’ needs? How will insurers gain market competitiveness while developing products that protect our assets and our data? People and companies in the Hartford Region are driving these innovations, technologies and decisions.

The property and casualty (P&C) insurance industry has seen significant innovation, with many companies redefining personal insurance with telematics and using real-time data for underwriting in both commercial and personal insurance. Meanwhile, the health and life insurance sectors are implementing new technologies to help them provide support for better health, mental well-being and financial wellness for employees and employers.

Innovation is also driving product development and risk management solutions, which are incorporating concepts like the Internet of things (IoT), wearables, big data, machine learning and hyper-personalization. In Connecticut, more IFS companies are integrating InsurTech and FinTech into their business models and building collaborative opportunities, like The Hartford, which is partnering with Tractable to provide artificial intelligence (AI) claims processing.

In the Hartford Region, the economy is continuously strengthened by the IFS industry. With $22.3 billion in gross state product (GSP), Connecticut has the #1 U.S. rank in GSP as a % of total GSP (Source: Insurance Market Brief, 2020).

Connecticut’s economy generates $11.6 billion in direct written health premiums with the #1 U.S. rank, $4.1 billion in direct written life premiums with a #6 U.S. rank, and $3.5 billion in direct written P&C premiums with a #6 U.S. rank (Source: Connecticut Insurance Department/National Association of Insurance Commissioners, 2019).

Connecticut companies have substantial value. Tech conglomerates, including Galaxy.E Solutions, HCL Technologies and Infosys, have expanded into Hartford and Connecticut, further enhancing the state’s economy.

In 2021, key mergers and acquisitions impacting Connecticut’s economy included Travelers’ plans to acquire InsuraMatch, Resolution Life completing the acquisition of Voya Financial’s individual life business, UnitedHealth Group’s Optum announcing plans to buy Change Healthcare for $13 billion, news of Cigna’s Evernorth acquiring telehealth company MDLIVe and M&T Bank purchasing People’s United Bank for $7.6 billion.

Connecticut’s captive insurance industry is also leading the nation in growth, with a #1 rank in percentage of domicile formation in 2020 and a #1 rank in net percentage formation growth in 2020 (Source: Captive Review 2020 Annual Domicile Review).

“The expertise in Hartford is the foundation for the thriving captive insurance industry in Connecticut,” explains Connecticut Captive Insurance Association (CCIA) Executive Director Kathryn Dube. “Our human infrastructure of captive managers, auditors, accountants and risk managers is best in class. This skilled and concentrated talent pool is the basis for our #1 ranking in captive formation in 2020 by U.S. Captive Review.”

Connecticut’s IFS workforce is well-educated, innovative and committed to contributing to a strong state-wide economy. For every insurance job, 4.4 jobs are added to the Connecticut economy (Source: Economic Modeling Specialists International [EMSI], 2020).

The IFS industry in Connecticut employs more than 100,000 people, including young professionals and those with experience in the industry. The Hartford Region ranks #1 in the United States for insurance employment per capita (EMSI, 2020) and ranks #1 in the United States for highest concentration of actuaries (Occupational Employment Statistics, Bureau of Labor Statistics, 2020).

Higher education institutions in Connecticut are also committed to creating a pipeline of talent for the IFS industry. For example, to meet the industry’s needs and prepare students for innovative opportunities, in April 2021 the UConn School of Business introduced a new Master’s in Financial Technology program.

“Our industry partnerships in Connecticut are strong. UConn’s foundation is innovation, so it was a natural fit for us to develop a program that meets the criteria demanded by the industry, covering topics including AI, machine learning, IoT, blockchain, robo-advising and capital markets,” explains John Wilson, Academic Director, MS FinTech, and Instructor In-Residence, University of Connecticut.

With access to insurance and tech giants, cutting-edge FinTech and InsurTech, and skilled talent, the Hartford Region is alive with opportunity in an environment that’s productive, innovative and affordable.

TOPEKA, KS: FINANCIAL SERVICES IN THE HEARTLAND

The financial services industry is a cornerstone of Topeka, Kansas’ economy. It accounts for a large percentage of the population’s employment and has been instrumental in contributing to community development and growth. At certain points in Topeka’s history, key industry players even proved to be a guiding force to elevating the prestige of the Capital City of Kansas.

Advisors Excel (AE) was established in 2005 by three innovative Kansans: Cody Foster, Derek Thompson and David Callanan. AE provides service to financial advisors and brokers from across the U.S. Although at its inception the company focused primarily on fixed index annuities, they have since expanded into life insurance and investments.

One of AE’s special features is its in-house ad agency. This team helps advisors with everything from business logos, letterheads, websites, radio commercials and more.

According to co-founder Cody Foster, Topeka has been their biggest competitive advantage. “From a service-based standpoint, you’re only as good your people and the people here are awesome,” he says. “It’s never been a challenge to find good people.” Indeed, the company has benefited from its capable employees. And, in turn, AE has become a fixture in the Topeka business community and a strong supporter of many civic and philanthropic endeavors.

In 2020, construction was completed on AE’s second campus at Gage Center. This expansion brought over 200 new full-time jobs, resulting in an economic impact of $12.4 million. In total, AE has over 700 employees in the Topeka & Shawnee County area. The second campus expansion is thanks in part to an incentive contributed by the Joint Economic Development Organization (JEDO) of Shawnee County.

FHLBank Topeka’s history is a unique one. Of his many personal crusades as Vice President, Charles Curtis, Topeka native, wanted to help breathe new life into the depression era economy. In 1932, his work led to the creation of the Federal Home Loan Bank (FHLBank), and its location in Topeka is his doing.

In a statement made in 2016 during the dedication of a statue made in Curtis’ image in Downtown Topeka, Pat Doran, executive vice president, FHLBank Topeka, remarked:

“Charles Curtis has a special place in FHLBank Topeka history. In fact, we wouldn’t be here in Topeka if it wasn’t for him. In 1931, at the height of the Great Depression, hundreds of thousands of American families were losing their savings and their homes, as lending institutions collapsed. Home lending ground to a virtual halt. This economic shock exposed major weaknesses in the foundation of home financing and homeownership in the U.S. With the home lending market in peril, President Hoover called for innovative measures to reform the system. Alarmed by the failures, and deeply troubled by signs that homeownership was beginning to erode, Hoover urged Congress to find ways to restore liquidity to the system….The result, the Federal Home Loan Bank Act was signed into law on July 22, 1932. The act created a central reserve credit system made up of 12 banks located across the country. Their mission was to support residential mortgage lending and community investment by providing credit to savings and loan associations…Charles Curtis is a big reason FHLBank Topeka is in our community. Many of the other FHLBanks are located in major metropolitan areas like New York, San Francisco, Boston, Dallas and Atlanta. Thanks to native Kansan Charles Curtis, who was vice president of the United States under President Hoover at the time the Federal Home Loan Banks were created, one of the banks is located in Topeka.”

With a legacy spanning over 129 years, Security Benefit has held true to the enduring belief that everyone deserves the opportunity to achieve financial security. This is why the core of its brand is based on a handshake between the original Knights and Ladies of Security. This fraternal beneficiary society, predecessor to Security Benefit Association, built a national reputation for ingenuity and philanthropy in 1892.

Today, Security Benefit is a privately held financial services company focused on the U.S. retirement space. In the past decade, the company experienced tremendous growth—more than tripling its employee base to 2,000 worldwide, and almost quintupling its assets under management to $46.4 billion (as of December 31, 2020).

Keeping with its core principles of wisdom, protection and security, Security Benefit’s Charitable Trust focus extends to more than 100 organizations that serve low-income and at-risk individuals; promote education, health and the arts; and support diversity initiatives.

Security Benefit collaborates on numerous community efforts designed to enhance economic and workplace development. The company played an integral role in the launch of Topeka’s Plug and Play initiative in 2020, which will position the community as a regional accelerator for animal health and agtech startups working in the Animal Health Corridor.

CHARLOTTE, NC IS INNOVATIVE AT ITS CORE

When BB&T and SunTrust Banks merged in 2019 to form one of the nation’s largest commercial banks, the newly named Truist Financial selected Charlotte for its headquarters. Truist was formed with a shared purpose—to inspire and build lives and communities—and with its combined resources, collective passion and commitment to innovation, Truist is creating a better financial experience to help people and businesses in the Charlotte Region and beyond achieve more.

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Kelly King, CEO of Truist Financial (Photo: Charlotte Regional Business Alliance)

“We are a little different as a financial institution in that we are very focused on our purpose, which is to inspire and build better lives and communities, and we believe that is our reason for being,” said Kelly King, CEO of Truist. “We have a very strong culture, very strong mission and very strong set of values so we believe we have a special purpose, a special role in making a difference to make the world better from our home in Charlotte.”

More than 80,000 people work in finance and insurance in the Charlotte Region, including 2,200 Truist associates in Charlotte. The financial services sector is flourishing in the region, to the point that it was one of only two sectors that added jobs during the pandemic. King is not surprised that professional services talent wants to relocate to a region that energizes and inspires them.

“Innovation breeds innovation, and Charlotte is quickly becoming one of the country’s most innovative areas,” King said. “Charlotte is inspiring because you’re looking at other institutions that are large and growing and successful and that creates an aspirational view. Everyone is more inclined to have a growth mindset in that kind of environment where we can learn, grow, adapt, change and continuously improve. Charlotte has an attitude of ‘we can do it’ because it has an innovative core that’s building on itself literally by the day.”

According to the Charlotte Regional Business Alliance, which collaborates to promote and advance economic development in the 15-county Charlotte Region, the rankings tell the story of a region on the cusp of a transformation that accelerates with each passing year:

  • Charlotte ranked No. 6 in the Top 25 Best Places to Live in the U.S. in 2020–2021 by U.S. News, a jump from No. 20 last year.
  • Charlotte ranked No. 2 in the U.S. for economic growth potential and among the top 10 for startups.
  • One of the nation’s fastest-growing cities, Charlotte is the second-largest banking center in the U.S.
  • The headquarters or regional headquarters for three of the six largest U.S. banks, including Truist, are located in Charlotte.
  • Charlotte grew by 32 percent over the past five years—the fastest of the top 50 metros—and about 50 percent more than the second-fastest-growing metro.
  • Charlotte is one of the most rapidly growing tech talent markets in the U.S. and has the fourth-highest millennial population growth among top tech markets.
  • Charlotte’s finance sector, which employs 90,0000, has the third-highest concentration of financial services talent among top 50 metros.
  • North Carolina is Business Facilities’ 2020 State of the Year, a ranking due in part to the success of its largest city.

The Charlotte metro is the second-highest concentrated market for advanced manufacturing materials among the top 50 metros. Manufacturing employment in the region has grown at twice the national average since 2013.

From King’s seat, Charlotte and its 15 surrounding counties are on a remarkable trajectory that will continue to evolve, transform and redefine growth and economic development—and rankings—for generations to come.

“Generations from now, our region will be recognized as a good a place to live and work as anywhere in the world,” said King, a North Carolina native who has witnessed firsthand Charlotte’s transformation as a global powerhouse. “It will be a diverse community nationally recognized as a center of innovation and even more respected and admired than it is today. Our rankings will continue to demonstrate the richness of our story.”

Charlotte’s traditional strength as a banking headquarters city provides the foundation for the region’s economic success. Listen to King discuss how Charlotte’s growing population, young and talented workforce and innovative spirit fuel a thriving financial services sector at AltogetherBetterCLT.com, and hear from other business leaders who are bullish on the region over the long term as well.

Check out all the latest economic development, corporate relocation, corporate expansion and site selection news related to the FinTech industry.

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