Boston is famous for many things. Harvard, regularly touted as one of the world’s top universities; a well-known baseball team called the Boston Red Sox; and with the country’s oldest restaurant, Union Oyster House, a reputation for world-class cuisine.
The latest badge Boston has added to its jacket is one of a rising fintech hub.
It’s not often that you here Boston being mentioned in financial technology circles but with a great history in innovation, ready supply of highly-qualified workforce, strong investment and finance presence, and a supportive ecosystem, Boston is fast becoming a global fintech centre.
History of innovation
Boston started out as a port city. Through its trade and commerce it naturally attracted entrepreneurs and innovators. In fact, the first ever US subway was built here.
Boston is also the birthplace for many of the computer aspects we take for granted today, including RAM (Random Access Memory), first digital electronic computer and the first animation through computer graphics. It all came by way of a pioneer in Computer Models, Jay W. Forrester, and his field, System Dynamics Modelling.
Today, some of the most innovative fintech companies call Boston home, including Circle, a peer-to-peer mobile payments app based on Blockchain technology, and Kensho, a machine learning analytics solution that’s been adopted by BOA, Goldman Sachs and JP Morgan.
Boston is known for a strong financial sector, including a prominent VC presence.
In 1784, Massachusetts Bank was opened to support the city’s booming trade and commerce industry. Back then it was only the second bank in the whole of the US.
Today, more than a 100,000 individuals work in Boston’s financial sector, that’s around 15% of the 667,000 inhabitants.
Some of the globe’s biggest financial institutions have their headquarters here, including Fidelity, Liberty and insurance firm, John Hancock.
Boston also attracts around $32 billion VC investment for technology startups (around 9.5% of the US total), with $510 million going directly to fintech startups.
The number one growth driver of a fintech hub is access to a ready supply of enthusiastic and highly-skilled workforce that’s not afraid to think outside of the box. And Boston has this in abundance.
As a student city, Boston is ranked number 8 in the world according to QS Best Student cities 2017.
There are around 60 universities and colleges in Boston, with Harvard and MIT consistently ranking within the top 5 universities globally.
In fact, Boston’s student population make up more than a third (37%) of the city’s total population
Fintech startups need the support from the environment in which they operate in order to survive.
Accelerators and incubators are the perfect platforms to provide such support and have become the hallmark of a thriving fintech hub.
MIT Fintech Club is a student-run fintech conference that aims to build an ecosystem where innovation meets financial technology to build solutions for the future.
They have an annual meetup to bring together the various stakeholders of the financial technology sector, including investors, regulators and big corporations.
FinTech Sandbox is a Boston-based incubator that drives global FinTech innovation and collaboration by providing access to industry data. They have around thirty partners providing the startups with high-quality fintech data, including Thomson Reuters, S&P Global and Experian, to name but a few.
Boston is home to some of the most unique startups within the fintech landscape, including Quantopian, an investment platform that raised $270 million in funding and allows anyone to create and evaluate investment algorithms, and LevelUp, a mobile payments and loyalty rewards app that raised $95 million in funding.
With a strong academic and entrepreneurial history combined with an established financial sector and an ecosystem that not only provides adequate human capital but also startup support, Boston is certain to become a more prominent feature in fintech circles as time goes by.