A friendly rivalry seems to be bubbling up between New York and London over which is the world's next big financial technology hub.
Accenture and the Partnership Fund for New York City, an investment fund that supports New York-based entrepreneurs, released a study Thursday detailing how the city is emerging as a hotbed of investment in financial technology firms.
"Fintech investment in New York has grown at more than twice the rate of Silicon Valley," Maria Gotsch, the president and chief executive of the Partnership Fund, said at an innovation conference in New York Thursday.
Silicon Valley is still the largest recipient of fintech investment, the study acknowledges, but it is facing growing competition from New York or Silicon Alley as some call it. New York had a third as many fintech investment deals as Silicon Valley in 2011, two-thirds as many in 2013 and a near-equal number in the first quarter of 2014. (Seventeen investment deals had closed in New York as of March 31 versus 19 in Silicon Valley.)
Between 2008 and 2013, New York reaped $1.1 billion in fintech investment, including $430 million last year, making it the world's second largest fintech center, according to the study. LearnVest, for instance, a personal finance platform founded by a former Morgan Stanley trader, received $28 million in venture capital this April. Online lending startup OnDeck recently secured $77 million.
"Unlike Silicon Valley, New York offers proximity to a huge potential customer base of financial institutions and a vast existing financial technology workforce, in addition to its burgeoning venture ecosystem," stated the report, which was released at the FinTech Innovation Lab Demo Day co-hosted by Accenture and the Partnership Fund. "This makes the city a natural contender to be a world leading fintech capital, bringing new jobs and capital to New York and helping to secure the long-term competitiveness of the U.S. financial services industry."
But New York fintech boosters need to keep a wary eye on London sometimes called Fintech City which makes a similar claim to fintech supremacy.
A London blog called City A.M. recently declared, "London is now the biggest global centre for financial technology firms, beating both Silicon Valley and New York based on the number of people the industry employs." According to the blog, there are 44,000 people working in fintech in London, compared to 43,000 in New York and just 11,000 in Silicon Valley. (This is based on research conducted by South Mountain Economics and Bloomberg Philanthropies.)
The growth in employment in the wider tech and information sector in London more than tripled between 2009 and 2013 compared to the previous four years, to 382,000 people. (New York City has 150,000 tech jobs, according to the Partnership for New York City.)
And let's not forget Silicon Prairie, an amorphous term that's used to refer several areas in middle America, in Texas, Illinois, Wyoming and a multistate region comprised loosely of parts of Nebraska, Iowa, South Dakota, Kansas, Minnesota, North Dakota, southwestern Ohio and Missouri. There's been less fintech news coming out of the prairie of late, but it is home to Dwolla and SmartyPig.
And then there's Atlanta often referred to as Hotlanta which spawned such firms as Kabbage, Cardlytics and ControlScan.
Globally, fintech investment has tripled to $3 billion since 2008, according to the Accenture/Partnership Fund report.
The New York fintech startups are working harder to attract talent and investment, observed David Reilly, technology infrastructure executive at Bank of America, in an interview at the Fintech Demo Day. "Maybe that's a sign it's getting more San Fran-like."
But Reilly interjects a dose of reality to the idea that New York, London or any other metro hub is the new center of fintech innovation. The engineering talent, entrepreneurs and tech giants are all firmly entrenched in Silicon Valley and they aren't leaving those sacred, sun-washed grounds.
"Everybody's tried to recreate [Silicon Valley] Silicon Alley, Silicon Glen [the high-tech sector of Scotland]. There's a reason Google and others want to widen the highway from San Francisco to Palo Alto," he said.
"Displacing [Silicon Valley] is not easy to do."
Penny Crosman is Editor in Chief of Bank Technology News and Technology Editor of American Banker.
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