There is no need for fintech founders in Massachusetts to head west to pitch their ideas, or for bank executives to venture to conferences across the country to learn about new technologies, when opportunities are ripe at home.
That’s the view of
A network of 27 financial services companies, universities, venture capital firms and public sector organizations — including Brandeis University, John Hancock and the nonprofit accelerator MassChallenge FinTech — are behind the Massachusetts Fintech Working Group, which formed in early 2020 and established the Mass Fintech Hub. Mike Kennealy, housing and economic development secretary for Massachusetts, and Mike Fanning, head of MassMutual U.S., co-chair the group;
As efforts to encourage fintech development at the
Programs will connect companies with regulators to surmount compliance issues in their business models, entrepreneurs with early access to academic research and founders with local funders. Career fairs and mentoring efforts will introduce students to job opportunities in fintech; Fintech Bootcamp, a two-day seminar run by the Mass Fintech Hub that teaches fundamentals, will encourage incoming college freshmen from low-income backgrounds to participate.
The Mass Fintech Hub also will expose banks to fintechs that are seeking partnerships.
“Given that the basis of economic growth in the Commonwealth and our country can be traced to Main Street businesses, we felt it was critically important at this moment that the local and regional banks play an active role in the Mass Fintech Hub,” Sarah Biller, co-founder of FinTech Sandbox and member of the Massachusetts Fintech Working Group, said in an email.
Reading Cooperative in the past has relied on fintechs, including Summit Technology Consulting Group to assist with loan origination during the Paycheck Protection Program, and it's a founding member of the Alloy Labs Alliance consortium of community and midsize banks to promote adotion of new technology.
The relationships with Summit Technology and the Alloy Labs Alliance stemmed from conferences, including one that took place in Hawaii. But Thurlow says she shouldn’t have to travel that far to discover new products for her customers.
“We could all go to Finovate in New York or Money20/20 and listen to pitches, or we could find people doing good work closer to home,” she said.
Thurlow looks forward to discussing her experiences with fintechs with other financial institutions and evaluating best practices together.
“What I like about the plans for Massachusetts is it’s about helping fintechs meet banks and banks meet fintechs,” she said. “When you are part of a financial institution association, they are looking out for the banks’ self-interest. In this case we are looking out for the betterment of the ecosystem within the state.”
The cross-sector leadership is also significant. “It’s not just bankers looking to meet fintechs and expecting them to follow their rules,” she said. “We are looking for ways to make the rules easier.”
Moreover, by involving local investors in the initiative, developers and founders may be persuaded to stay in Massachusetts rather than feel compelled to pitch their ideas in Silicon Valley.
The seeds for the Mass Fintech Hub were planted in 2018, when the Executive Office of Housing and Economic Development in Massachusetts initiated a study of emerging technologies and ways to bolster the state’s innovation economy. Fintech rose to the top of the list.
Biller names several advantages that set Massachusetts apart, including top colleges in the state and the presence of hundreds of financial institutions and fintechs. She points to the payments firm Flywire’s recent initial public offering and the cryptocurrency services firm Circle’s recent $440 million round of funding as two Boston-based success stories.
“The Commonwealth is home to world-class insurance, payments, lending and digital currency companies,” she said.
The Fintech Working Group commissioned a study by Ernst & Young in 2020 that found more than 350 fintech startups are headquartered in the state. There are also 105 academic institutions; 29 fintech-focused incubators, accelerators and innovation labs; and nearly 500 capital providers. Many of the 283 banks, 67 wealth and asset managers and 55 insurance firms that are either headquartered or have a strong presence in Massachusetts readily invest in fintech startups.
Moreover, the study found that Massachusetts firms represented approximately 9% of fintech startups in the U.S. in 2019.
Although the focus is on Massachusetts-based initiatives, individuals and organizations from outside the state can participate. One that has is Citizens Bank in Providence, Rhode Island, a unit of the $187 billion-asset Citizens Financial Group.
“We benefited enormously fom the vision of the Providence-based Citizens Bank team’s participation in the working group last year,” Biller said.
Joining the working group was a natural fit for Citizens, says
“We have strong partnerships with fintech accelerators around the country, and get access to much of the early-stage technology through the relationships we have with MassChallenge in Boston, QC Fintech in Charlotte and Plug and Play in Silicon Valley,” she said over email. “We believe that supporting the Mass Fintech Hub will provide additional avenues to source top-notch talent and technology.”
