FinTech Could Be the Core NYC Needs to Differentiate Its Startup Scene
Consumer-driven startups tend to spread like wildfire in this town, from shopping for pet products to apps for finding hip nightspots—but tech ideas born from New York’s financial heritage have been something of a slow burn.
It is about time that changed.
This summer, the Barclays Accelerator, in partnership with Techstars, will host its first New York-based class with Jenny Fielding heading things up. Fielding is also managing director of the R/GA Accelerator run in partnership with Techstars.
Ten startups from the fintech sector will be picked for the 13-week program; the deadline for applications is today, May 12. The launch of the accelerator is one of the latest efforts—which also include hackathons and other programs—to better connect New York’s extensive financial industry with the tech scene.
“All the money’s here, all the banks are here,” Fielding says. Barclays already has a fintech accelerator running in London and wanted to bring that action to New York. Fielding says other organizations might also see the opportunity here and follow suit, which could lead to more fintech accelerators appearing in New York.
“A lot of people in financial services are catching the startup bug, and realize they don’t have to work at the big firms,” Fielding says. That includes people with long careers at banks. Recruiting for the Barclays NYC Accelerator has not been limited to this city, and included trips to the San Francisco Bay Area, she says.
The program is open to fintech ideas for business-to-business as well as business-to-consumer startups, and such underlying technology areas as cyber security, machine learning, artificial intelligence, natural language processing, big data analytics, cryptocurrency, payments, and lending.
Many fintech jobs already exist across New York’s five boroughs—some 40,000 according to a report last year from the NYC Jobs Blueprint initiative. However, many of those are positions with financial institutions. And while fintech startups have emerged here, they have remained largely in the minority.
The new accelerator is not alone in the push to change that. For the past couple of years, the city has been home to The FinTech Hackathon, held again last month. Jay Bhattacharya, CEO of Zipmark, says bringing together engineers for a weekend to develop prototypes for fintech is a relatively new idea. “The democratization of systems in financial services has helped,” he says.
Zipmark, a sponsor of the hackathon, is a service that lets businesses use checking accounts to make and accept electronic payments. Credit cards are more commonly used for online payments, Bhattacharya says. This year’s hackathon included a team called Value Leagues, which used Zipmark’s API (application programming interface) for a stock picking game that also collected a $1 daily fee from players.
Zipmark, which got its start in 2010, is a graduate of New York’s FinTech Innovation Lab, a program run by the Partnership Fund for New York City and Accenture to help such startups get their ideas ready for market.
Traditional notions about the financial services industry started to change, Bhattacharya says, after a realization that the market could no longer be defined just by a handful of large banks. The first generation of financially innovative companies such as PayPal came from the West Coast, he says. They redefined and filled a need that emerged with wide adoption of the Internet. The next generation of fintech companies, Bhattacharya says, has an opportunity to scale up substantially.
New York has already witnessed some of that progress. Last December, OnDeck, an online service for small business lending, raised more than $200 million when it went public. Meanwhile startups such as Orchard Platform, Betterment, and Quovo continue to carve out niches for themselves.
Even if fintech startups do not scale up on their own, they could be attractive targets for larger institutions. “Financial services is one of the most highly acquisitive industries out there,” Bhattacharya says. Big banks, credit card processors, and trading companies want to get their hands on technology that entrepreneurs have developed. “Larger companies are hungry for the faster growth that these innovative products provide,” he says.
For all the potential that surrounds fintech, however, … Next Page »