Investment in affordable city infrastructure will help boost US fintech
5 Jun 2018
The fintech industry, packed with creative individuals and scrappy startups, has posed perhaps the biggest challenge to the traditional banking industry - yet it also provides enormous opportunity. Financial institutions are faced with the choice of burying their heads in the sand and losing touch with changes in the market, or being left behind by fintech innovation.
In the U.S., value in the fintech market has already risen to $1.26 trillion in 2018. And the UK has recently been described by the Chancellor of the Exchequer as the “global capital of fintech,” contributing £7 billion to its home economy. These figures hint that it’s incumbent upon traditional financial institutions to fully embrace digital economies. Banks and other financial institutions can help startups succeed by providing money and mentoring them. Another way to provide critical support is to invest in infrastructure in underdeveloped cities, in order to better harness and grow this industry.
However this is much more than simply throwing money at startups. We can help them gain their footing in those cities that are ripe for reinvention and renewal by investing in infrastructure and local economies. There are many of these second- and third-tier cities in the U.S.—from Kenosha, WI to Little Rock, AR to Syracuse, NY.
These kinds of cities have since been rocked by corporate pullouts and population loss; nonetheless they are liveable places with far more affordable real estate. It’s been our experience in the UK that by investing heavily in updating and connecting these second-tier cities, “forgotten” places like Leeds and Manchester, we’ve been able to spark prosperity. We become their partners in reinventing themselves—again, not just throwing money at them but helping them think through and achieve the civic attributes that would help them thrive. Some ways of doing this have included investing in roads and railway lines, building and renovating housing near office parks and other places of work, and even local points of pride.
Living and working in a smart city—a sweet spot for fintech entrepreneurs—requires different approaches to IoT in homes, traffic management of autonomous vehicles, smart energy management including local micro-grids, and so on. Of course, excellent intra-city transport and good, affordable housing are fundamental. Plunging patient investment capital into less glamorous but decidedly more infrastructure-friendly cities would help these innovative businesses start up and thrive.
While innovative partnerships must be entered into for the right, positive reasons, and need the support of enabling regulators, emboldened leaders and ambitious governments, there is great opportunity here for growth, prosperity, and job creation. Fintech innovators are offering our customers services that are fairer, speedier and stronger than we’re able to offer them. By failing to embrace these emerging realities, we risk falling behind challengers coming out of Asia and elsewhere.
...this is much more than simply throwing money at startups. We can help them gain their footing in those cities that are ripe for reinvention and renewal by investing in infrastructure and local economies.