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Investment in financial technology (fintech) in the United States could reach $4.7 billion annually by 2018, and New York has every chance of being the prime beneficiary. Banks, capital markets firms and insurers have increasingly opened their eyes to the benefits of having a fintech cluster close to home—and it shows. The city’s fintech sector has grown at twice the rate of Silicon Valley’s over the past five years.
And while New York has made much progress in establishing itself as a leading fintech center, it has yet to give birth to a new generation of fintech companies substantial in size, and that’s limiting the city’s ability to attract influential capital.
In this report, we explore New York’s unique advantages, we look at how the FinTech Innovation Lab is addressing some of the sector’s challenges, and we discuss how fintech supporters can help the city realize its full potential.
Since 2008, global investment in fintech ventures has tripled to nearly $3 billion. This trend is set to continue, with global investment on track to grow to up to $8 billion by 2018. With its huge financial center, New York has become the fastest growing market for fintech investment in the United States and second in the world after Silicon Valley for annual deal flow and investment.
The FinTech Innovation Lab—now in its fourth year—shows just how effective the relationship between entrepreneurs and financial institutions can be. Since participating in the program, the Lab’s 18 alumni have raised $76 million and one company was acquired for $175 million.
Despite New York’s progress in establishing itself as a leading fintech center, it has yet to give birth to a new generation of fintech companies substantial in size that could solidify its standing—and this is a problem. The city’s relatively low fintech profile is limiting its ability to attract influential capital.
Historically, financial institutions have been difficult customers for startups to service because of their long sales cycles and complicated procurement processes. New York’s FinTech Innovation Lab has proven an effective way of addressing the long sales cycle. Past experience shows it can reduce the typical 18-month sales cycle to 12 weeks by helping startups turn their innovations into the products and services that participating banks need the most.
New York has a unique advantage in fintech to lead the world as a technology center. Fintech investment in the United States could reach $4.7 billion annually by 2018, and New York has every chance of being the prime beneficiary. The city is already the fastest growing fintech cluster in the country, with a rapidly growing ecosystem comprised of startups, capital, talent, education resources and fintech accelerators.
To realize its full potential, however, New York’s fintech supporters must:
June 25, 2014
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