Inside New York City’s push to become a global fintech capital

06.01.2018 - New York

In 2010, Maria Gotsch (MBA 1989) called a meeting with the chief information and technology officers at five of the largest banks headquartered in Manhattan. The session would last for three hours, but as Gotsch recalls, the executives in the room barely glanced at their phones. They were too intent on what Gotsch and her colleague, a senior capital markets consultant at Accenture, had to say—or more precisely, what they had come to ask: Where, exactly, do you look for new and innovative financial technology?

The response was quick, blunt, and unanimous. “Every single person in that room said California, Boston, sometimes London,” recalls Gotsch. “Nobody was looking locally.”

Gotsch is president and CEO of the Partnership Fund for New York City, which invests in local ventures to create jobs and grow the Big Apple’s economy. (The Fund is the investment arm of the Partnership for New York City, a nonprofit composed of some of the city’s largest private firms.) As a result, she is always on the lookout for sectors that the city ought to dominate but doesn’t.

Eight years ago, the sector in Gotsch’s sights was fintech—a once obscure but now ubiquitous phenomenon that is revolutionizing everything from online payments and wealth management to cybersecurity and insurance through digital technologies as diverse as blockchain and artificial intelligence. Despite being the world’s financial capital and home to an otherwise robust technology sector, New York had yet to become a major player on the fintech scene.

Today, the situation could not be more different. Thanks in part to Gotsch’s efforts, which led to the establishment of the FinTech Innovation Lab (FIL)—an über-accelerator jointly run by the Fund and Accenture that turns out market-ready fintech startups the way a bakery cranks out cookies—New York now holds a demonstrable lead over Silicon Valley in terms of fintech investment in the United States. According to CB Insights, a New York startup that uses algorithms to collect and analyze data on private firms, VC-backed fintechs in Silicon Valley raised $1.3 billion in equity financing in 2017, while their Silicon Alley cousins raised $1.5 billion, or 15 percent more. (CB Insights was in the first FIL graduating class.) The total number of equity financings was higher, as well, with 122 in New York versus 70 in the Valley.

And the story of how New York came to realize its potential as a fintech hub is a blueprint—offering concrete lessons about how cities can build their own entrepreneurial ecosystem from scratch.

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