By BF Editors
From the July/August 2022 Issue
Over the past several years, there has been significant expansion of activity in the FinTech sector—an expansive term applied to technology-driven disruptions in financial services, where financial companies and startups use artificial intelligence (AI) and other tech in day-to-day processes. The global FinTech market was valued at USD7301.78 billion in 2020 and is projected to grow at a CAGR of 26.87% by 2026, according to a October 2021 report from research firm, ResearchandMarkets.com.
The report, Global FinTech Market, By Technology, By Service, By Application, By Region, Competition Forecast & Opportunities, 2026 found that “rising popularity for digital payments, increased investments in technology-based solutions, supportive government regulations, and increased adoption of IOT devices are expected to positively influence the global fintech market in the coming years.”
The report noted that AI has become a critical element in terms of collecting data, analyzing information, and creating customer-centric products.
Based on service, the market can be segmented into payment, fund transfers, personal finance, loans, insurance, and others including equity, wealth management, etc. The payment segment is expected to dominate the market in the year 2020, however the insurance segment is expected to grow at the fastest growth rate in the forecast period. Based on end-use industry, the market is sub-segmented into banking, insurance, securities, and others including e-commerce, ITR, etc. The banking segment captures the highest market share in the year 2020 and is expected to dominate the market in the forecast period (to 2026) as well.
As FinTech firms consider their next location or expansion for operations, this article takes a look at a several burgeoning locations for the sector.
Charlotte, NC: Hot Spot For Financial Services Industry
It would be an understatement to say the financial scene in the Charlotte Region has changed in the last 35 years. Finance has always been a key industry for Charlotte, NC dating back to the gold rush of the early 1800s and the opening of a Federal Reserve Bank branch in 1927. But it was the megamergers in the 1980s and 1990s that defined Charlotte’s stature as a banking empire and cemented the city as a global financial destination.
Today, the Charlotte Region is home to over 91,000 financial services jobs, which has resulted in aggressive hiring competition over a deep supply of regional talent. The city’s finance sector has the third-highest concentration of financial services talent among the top 50 metros, and the talent base in the region’s financial services industry continues to grow with the sixth-most in-migration in 2020. Ally Financial, the largest online-only bank in the U.S., is but one reason Charlotte is now the second-largest banking center in the country.
“Charlotte has obviously positioned itself as one of the major banking headquarters in the U.S., and banking today fuels so much economic growth across the entire Charlotte Region,” said Jeffrey Brown, CEO of Ally Financial. “For Ally, we’ve been able to attract great technology, marketing and business talent. It’s just a city that has established itself as one of the strong financial centers and that fuels people wanting to come to our region, people wanting to be a part of such a vibrant scene.”
The Charlotte Region is made up of 15 diverse counties that ring one of the most important economic centers in North Carolina, and the financial services sector continues to fuel the region’s growth. For Ally, home to 2,400 associates, the success of its Ally Charlotte Center campus in center city is driven by a rapidly growing workforce drawn to the nation’s fifth-fastest-growing city, one that also has the fourth-highest millennial population growth among top tech markets.
“Charlotte has clearly established itself from its peers, as this recognition is both national and global,” Brown said. “When you think about the number of banks and financial institutions and the fintech sector, it really sends a strong message as to how far our community has come, and really the talent that’s available here.”
According to the Charlotte Regional Business Alliance, which collaborates to promote and advance economic development in the 15-county Charlotte Region, the financial services sector has grown by 32% since 2016. The sector is also fueling an innovation economy across the region that is expected to be a vital component of driving future economic growth, and development.
“As Charlotte’s growth attests, people really want to work as part of the financial services and technology community,” Brown said. “I think what you’re starting to see now, with new technology hubs and new technology centers, that’s only going to fuel additional growth going forward. The Charlotte Region’s brand is one around great energy, development and excitement—and Ally is proud to call this region home.”
Charlotte’s financial services sector and strength as a global banking powerhouse provides the foundation for the region’s economic success.
Connecticut: Destination For Tech Innovation
Insurance and financial services have been at the backbone of Connecticut’s economy for more than 225 years. As advances in innovation evolve, so does Connecticut, which ranks as a top 5 state for innovation (source: Bloomberg, 2020).
“With its insurance and alternative investment management industries, Connecticut is a recognized as a global financial center,” explains Connecticut Hedge Fund Association President Bruce McGuire. “The state is home to a growing number of private equity, venture capital, and digital asset firms.”
The city of Hartford continues to enhance its reputation as “The Insurance Capital of the World” with a unique combination of insurers, skilled talent, and innovation. Meanwhile, with its large concentration of fund managers, the town of Greenwich has earned the moniker “The Hedge Fund Capital of the World.”
According to the Connecticut Insurance Department (CID), the state is home to nearly 1,300 domestic and nondomestic insurance carriers, including accredited reinsurers, U.S. and foreign excess and surplus lines carriers, fraternal benefit societies, and title companies.
Connecticut has kept pace with ongoing breakthroughs in technology—including advancements in artificial intelligence and the Internet of Things. And Connecticut has created many opportunities, formally launching InsurTech, FinTech, MedTech, RetireTech, and RegTech initiatives and expanding its reach across the globe.
In March 2022, the UK Government announced a formal agreement with Connecticut Insurance & Financial Services, the MetroHartford Alliance, the CID, and Insurtech UK to launch a new InsurTech Corridor.
“The UK can now leverage Connecticut’s local insurance ecosystem and Connecticut now has more exposure to the UK insurance market, creating ‘a fast track’ for those seeking to internationalize their business,” explained CID Commissioner Andrew Mais.
Already, some FinTech companies are creating a U.S. presence in Connecticut, perhaps because Hartford is a top 10 destination for FinTech companies (source: Business Facilities, 2022).
London-based Wrisk, whose platform works with major insurers, recently formed a new subsidiary, Wrisk USA, which it plans to base in Hartford. Wrisk Chairman and Founder Niall Barton noted, “We chose Hartford because we needed to be rooted within the bedrock of the U.S. insurance scene.”
Higher education institutions in Connecticut are also creating new opportunities in the insurance and financial services industry. In 2022, the University of Connecticut School of Business became one of a few universities worldwide to launch a master’s degree program in FinTech.
“One of the aspects that will differentiate this program is its flexibility and responsiveness to a field that is evolving rapidly,” said John Wilson, the program’s Academic Director.
In collaboration with the University of Hartford, UConn’s Connecticut Center for Entrepreneurship and Innovation (CCEI) recently launched an InsurTech Venturing course providing students with direct connections and opportunities to work with local InsurTech startups and organizations.
Connecticut continues to embrace the future of technology and insurance and engage with local and global FinTech and InsurTech opportunities. The momentum continues to build, ensuring Connecticut remains “The Insurance Capital of the World” and leveraging the state to become “The InsurTech Capital of the World.”
In Topeka, KS, Financial Services Sector Supports FinTech Growth
Add FinTech and financial services to the strengths of the Topeka-area job market. The Kansas capital city, commonly known for such industries as government services and manufacturing, has grown in recent decades as a leader in the FinTech and financial services space. In fact, FinTech and financial services account for about 11% of the greater Topeka area’s employment. Meanwhile, the concentration of financial services alone is 39% higher in Shawnee County than it is in the U.S. at large.
Represented among local financial services are such companies as Advisors Excel, Security Benefit, SE2, Gradient Financial Group, Magellan Financial, Creative One, Innovation Design Group, and Market Synergy Group—just to name a few. Topeka is also home to a number of bank headquarters, including Capitol Federal Savings Bank, CoreFirst Bank & Trust, Fidelity State Bank, and several others serving the state and region. Thanks to the notable landscape of public-private partnerships in Topeka and Shawnee County, many of these companies embrace opportunities to support local organizations and initiatives, proving themselves true community partners.
One such community partner is Advisors Excel (AE), which recently opened a second campus in Topeka to serve the fast-growing number of financial advisors the company supports. Rather than expand elsewhere, AE chose to bolster its Topeka base, funneling $10 million in capital investment into a once-dilapidated retail complex and allowing the company to strategically advance its team.
SE2 is another great example of Topeka’s leadership in the financial services field. SE2 is considered the No. 1 administrator of variable annuities in the U.S., with $100 billion in assets under administration and one million agents, financial advisors, and sales entities supported. Next door to SE2 sits Security Benefit, which took home EQDerivatives’ 2018 award for “Insurance Risk Management Team of the Year.” Like the Topeka community itself, Security Benefit has grown significantly in recent years, more than doubling the company’s assets under management between 2011 and 2021, leading to nearly $50 billion under management today.
Clearly, the area’s financial services are strong, as Shawnee County touts a proven competitive advantage in the industry. Local leaders have identified FinTech as an area of current and future growth for the greater Topeka area. With a robust and established financial services base, FinTech startups that choose Topeka have the potential to capitalize on and strengthen a prominent local market with global reach.
Want to learn more about FinTech locations? Click here.
Business Facilities is a national publication that has been the leading location source for corporate site selectors and economic development professionals for more than 50 years. Focused on site selection for rising industry sectors, Business Facilities’ inaugural LiveXchange Emerging Industries event takes place November 16-18, 2022 at Loews Sapphire Falls Resort at Universal Orlando. The 19th Annual Business Facilities LiveXchange will take place April 24-26 at Marina Inn at Grand Dunes in Myrtle Beach, SC.