There's no need for Fintech founders in Massachusetts to travel west to share their ideas, or for bank managers to go to conferences across the country to learn about new technologies when the opportunities at home are ripe.
That's the view of Julieann Thurlow, President and CEO of Reading Cooperative Bank in Reading, Massachusetts. Reading Cooperative, with $ 659 million in net worth, is one of the participants in the newly launched Mass Fintech Hub, an initiative to drive innovation, retain talent and strengthen fintech-bank partnerships in Massachusetts.
"We could all go to Finovate in New York or Money20 / 20 and listen to pitches or we could find people who do good work close to home," said Julieann Thurlow, President and CEO of Reading Cooperative Bank.
A network of 27 financial services firms, 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 founded in early 2020 and established the Mass Fintech Hub. Mike Kennealy, secretary for housing and economic development in Massachusetts, and Mike Fanning, director of MassMutual U.S., are co-chairs of the group; The hub is operated by FinTech Sandbox, a Boston-based nonprofit that helps fintechs develop products with free data access.
As efforts to promote fintech development increase at the national and state levels, the Mass Fintech Hub takes a broader approach than others by bringing together financial institutions, startups, government agencies, investors, academics, and students in its mission to advance the state as a fintech leader.
The programs will connect companies with regulators to overcome 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 from Mass Fintech Hub that teaches the basics, will encourage aspiring college freshers from low-income backgrounds to attend.
The Mass Fintech Hub will also introduce banks to fintechs looking for partnerships.
"Given that the foundation of economic growth in the Commonwealth and in our country can be traced back to businesses on Main Street, it has been critical for us at the moment that local and regional banks play an active role in the Mass Fintech Hub" , Sarah Biller, Co-Founder of FinTech Sandbox and a member of the Massachusetts Fintech Working Group, said in an email.
Reading Cooperative has relied on fintechs in the past, including Summit Technology Consulting Group, to help with lending during the paycheck protection program, and is a founding member of the Alloy Labs Alliance consortium of community and mid-tier banks to help advance new technology to promote.
Relationships with Summit Technology and the Alloy Labs Alliance stem from conferences, including one in Hawaii. But Thurlow says she doesn'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 who do good work close to home," she said.
Thurlow looks forward to discussing their fintech experience with other financial institutions and jointly evaluating best practices.
“What I like about the Massachusetts plans is that it's about helping fintechs, banks and banks meet fintechs,” she said. “If you are part of an association of financial institutions, they pay attention to the self-interest of the banks. In this case we pay attention to the improvement of the ecosystem within the state. "
Cross-industry leadership is also important. "It's not just bankers who want to meet fintechs and expect them to follow their rules," she said. "We're looking for ways to simplify the rules."
Additionally, by involving local investors in the initiative, developers and founders can be convinced to stay in Massachusetts instead of feeling compelled to come up with 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 new technologies and ways to strengthen the state's innovation economy. Fintech rose to the top of the list.
Biller names several perks that make Massachusetts stand out, including the state's top colleges and the presence of hundreds of financial institutions and fintechs. She points to the recent IPO of the payment company Flywire and the recent financing round of the cryptocurrency service provider Circle in the amount of 440 million US dollars as two success stories from Boston.
"The Commonwealth is home to world-class insurance, payments, credit and digital currency companies," she said.
The fintech working group commissioned a study by Ernst & Young in 2020, which showed that more than 350 fintech startups are based in the state. There are also 105 academic institutions; 29 fintech-focused incubators, accelerators and innovation laboratories; and nearly 500 investors. Many of the 283 banks, 67 wealth and asset managers, and 55 insurance companies that are either headquartered or have a strong presence in Massachusetts are willing to invest in fintech startups.
Additionally, the study found that Massachusetts companies made up approximately 9% of fintech startups in the United States in 2019.
Although the focus is on Massachusetts-based initiatives, individuals and organizations from outside the state can participate. One of them is Citizens Bank in Providence, Rhode Island, a unit of Citizens Financial Group with assets of $ 187 billion.
"We have benefited tremendously from the vision of the Providence-based Citizens Bank team joining the task force over the past year," said Biller.
Joining the working group was a natural fit for Citizens, says Beth Johnson, the company's chief experience officer. Citizens was also a founding member of MassChallenge FinTech.
"We have strong partnerships with fintech accelerators across 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 per Email. "We believe that the support of the Mass Fintech Hub will provide additional opportunities to find world-class talent and technology."