By Nora Caley
From the May/June 2024 issue

Money changes everything, and technology has revolutionized the way money moves. Since the dawn of online banking and cashless payments, companies have launched innovations that simplify how people save, invest, protect and access their earnings. Consumers want simpler payment methods, businesses demand cybersecurity, and the world embraces high-tech tools.

The trends have led to the growth of fintechs, which are companies that rely on technology to perform financial services functions, including day-to-day banking, wealth management and payments. Fintechs have evolved from niche startups to multi-billion dollar businesses in mobile banking, cryptocurrency, blockchain, insurtech and wealthtech.

Investments in fintech have grown. According to a report by McKinsey & Company, venture capital funding for fintechs grew from $19.4 billion in 2015 to $33.3 billion in 2020, an increase of 17% year-over-year. Funding has continued to increase during the pandemic, in part due to the rise of digital payments. In 2022, VC funding for fintech companies totaled $55 billion, or about 12% of VC funding for companies that year.

(Photo: Adobe Stock / TenPixels)

Technology can help financial services companies overcome current challenges. According to a report by Deloitte, disruptive forces such as rising interest rates, shrinking money supply, regulations, climate change and geopolitical tensions will help reshape the banking and capital markets sectors in 2024. The report also notes that the impact of generative artificial intelligence, integrated finance, open data, the digitization of money, digital identity and fraud will grow in 2024. Banks are forced to reevaluate their strategies and evolve their business models.

One growing area is insurance technology, or insurtech, which refers to the use of innovations such as artificial intelligence, automation and data to streamline what was once a paperwork-intensive industry. According to Grand View Research, the global insurtech market size was valued at $5.45 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 52.7% from 2023 to 2030. The North America dominated the market, accounting for more than a 36% share of global revenue in 2022.

Here are some regions that attract fintech and financial services companies.

Hartford, CT: Unlocking the Tech Hub

In the dynamic landscape of technological innovation, Hartford, CT emerges as a jewel, offering an environment ripe for growth and prosperity for technology companies. Steeped in historic New England charm, Hartford is quickly establishing itself as a vibrant hub for tech startups and established businesses. Here’s why Hartford should be at the top of the list for tech expansion:

Expanding tech workforce. With a thriving talent pool, Hartford boasts a highly skilled workforce ready to drive technological advancements. According to the U.S. Bureau of Labor Statistics, Connecticut’s tech industry added more than 3,000 new jobs in 2023 alone, demonstrating the region’s robust talent pipeline. From software engineers to data scientists, Hartford offers access to diverse skill sets essential to the success of technology companies.

Global innovation ecosystem. Hartford’s unique designation as “The Insurance Capital of the World” is not just a title but a testament to its commitment to innovation. The city has become a hotspot for insurtech startups disrupting traditional insurance models through cutting-edge digital solutions. Regulatory support from the state of Connecticut and a culture of collaboration have fostered an environment where insurance giants and startups thrive side by side, positioning Hartford as a global thought leader in insurance trends and practices.

Hartford’s innovation ecosystem provides unparalleled support to technology companies every step of the way. The InsurTech Corridor, launching in 2022, is a collaboration between the UK Government’s Department for Business and Trade; Connecticut Insurance and Financial Services Trade Association; State Department of Insurance; MetroHartford Alliance, Insurtech UK; and the state Department of Economic and Community Development.

The Mayor of London, Michael Mainelli, [during a visit to Hartford] said: “The Insurtech corridor is very, very important to us and we have already seen five UK companies move here and open extensions of their existing businesses. We naturally hope to see some of them Connecticut US companies are moving in the opposite direction” (Source: Hartford Business Journal).

Nassau Financial Group is headquartered in Hartford, CT. The company headquarters
the building (in the center) of the city is known as the “boat building”. (Photo: Nassau Financial Group)

Strategic position. Located between Boston and New York City, Hartford offers strategic proximity to major metropolitan centers without the associated high costs. This central location facilitates collaboration and networking opportunities while providing easy access to key markets and talent pools. Additionally, with its robust transportation infrastructure, including New England’s second largest airport, Bradley International, Hartford ensures seamless connectivity for global businesses.

Favorable business environment. The business-friendly climate in Hartford is conducive to innovation and technological growth. The MetroHartford Alliance, together with public sector partners, actively promotes an environment that encourages entrepreneurship and investment. With competitive incentives and streamlined regulatory processes, Hartford tech companies can focus on their core objectives without unnecessary bureaucratic hurdles.

According to an in-depth analysis by the MetroHartford Alliance and CohnReznick, Hartford shines as a cost-effective destination for businesses. The combined annual cost of taxes and rent for tech companies seeking Class A office space in Hartford is significantly lower than tech hubs like Austin, Boston and New York City. This unique cost advantage positions Hartford as an attractive choice for insurtech and fintech companies looking to optimize their expenses and deliver value to their investors.

Visit metrohartford.com for more information.

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