Boston Preps for Fintech’s ‘Second Wave’
Move over New York and California, the Commonwealth of Massachusetts wants fintech startups to pick the Bay State as home sweet home.
“FinTech stands to be one of the emerging economic pillars for Massachusetts – attracting a host of promising start-up businesses and appealing to a wide range of growing enterprises,” Robert Reynolds, president and CEO of Putnam Investments and co-chairs the Boston Financial Services Leadership Council said in a prepared statement.
Nearly 181,000 jobs, or 6% of state employment, comes from the banking, asset management, and insurance industries, which represent $57 billion, or 14%, of Massachusetts gross state product, wrote the authors of seventh annual Financial Services Impact Report published jointly by Mass Insight Global Partnership and PwC.
These positions have remained relatively stable over the past several years with annual growth rate ranging from -1.9% in 2010 to 1.6% in 2015, according to the report.
However, William Guenther, CEO and founder of Mass Insight, views the state’s education system as its trump card to attract the talent needed to lead the “second wave” of the fintech revolution.
The Commonwealth is second only to the District of Columbia for the percentage of its population with graduate degrees (approximately 16%) and third, behind D.C. and Colorado of the percentage of its population with bachelor degrees (about 23%).
Massachusetts is also fourth overall in the US regarding foreign student enrollment and has educated more than 59,000 international students in 2016, wrote the report’s authors.
Regarding specialization, the private-public partnership among the financial services industry, universities, and state government has identified artificial intelligence/machine learning, robo-advisors, robotic process automation, cyber-security, distributed ledger technology, and digital identity as areas in which Massachusetts can play a development role.
Each of these fintech subsets can add a significant amount to the state’s economy, according to the authors who estimated that AI and big data startups had raised more than $2 billion in venture capital funding in this year alone.
To further attract fintech companies, development sandboxes, incubators, and accelerators, such as the Boston-based FinTech Sandbox, already support many Massachusetts-based startups by providing free or discounted access to data feeds and application program interfaces from financial industry partners for development purposes.
FinTech Sandbox also offers its members a range of data feeds from real-time market, custody and clearing data to machine readable news and social media information from a variety of the large financial institutions and data providers, according to the report’s authors. It also provides free cloud hosting from infrastructure partners as well as connecting startups to potential partners.
Ultimately, success will depend on a new level of collaboration between leading firms, academia, and the startups, added Mass Insight’s Guenther.
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