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However, these signs of the times are hardly a death knell for fintech. Many tech IPOs, including those of fintech unicorns, were wildly inflated by the 2021 venture capital (VC) bonanza. The plunges and layoffs making headlines today are corrections and reality checks after a period of explosive and unsustainable growth — not an indication that fintech is waning in prominence.

Instead, the fintech industry is continuing to push the boundaries of what is possible in the financial services industry. As the industry matures, fintech headquarters are no longer limited to traditional finance centers (i.e., New York City) and technology mega-hubs (i.e., the Bay Area). They are dispersing to cities where they can access the tech and finance talent that they need to build scale at salaries that don’t break the digital bank.

Fast Growth
The already expanding industry turbocharged when digital finance adoption increased en masse during the onset of COVID-19. People weren’t leaving home to visit bank tellers, and, in April 2020, digital banking adoption jumped 200 percent, according to Fidelity National Information Services.

Many people also had time to kill on newfangled trading platforms. Digital finance adoption remained elevated as consumer preferences shifted for the long haul and VC and traditional financial services companies poured billions into the sector.

Investment funding in fintech more than doubled in 2021 from pre-pandemic levels. That year, Coinbase went public with an $86 billion valuation, trailed by Nubank, Robinhood, and Toast, all unicorns valued at or above $20 billion.

While funding decreased through 2022 due to inflation, interest rates, the war in Ukraine, disruptions in the crypto industry, and other macroeconomic factors, it still ended the year above pre-pandemic levels.

The fintech industry is continuing to push the boundaries of what is possible in the financial services industry. America the Fintech-Savvy
The United States dominates the fintech market. U.S. deal funding represented 40 percent of all deals globally, with Europe at a distant second with 27 percent of deal value. With 78 percent of U.S. consumers now preferring to manage their finances online, fintech isn’t going anywhere anytime soon.

The ability to access finance and tech talent is a key factor in the success of U.S. fintech companies, as well as traditional financial services firms that are racing to compete with their own fintech offerings. As a result, the fintech landscape has dispersed across a broader range of market types, including markets of moderate scale with lower business and living costs.

Several factors drive where U.S. fintech companies decide to set up their headquarters. The type of fintech solution (i.e., payments vs. banking) and, most importantly, workforce recruiting strategy are among them.

Broadly, the geography of the industry now falls into three categories: core hubs, an established second tier, and emerging growth markets.

Core Hubs: The Bay Area and New York City
New York and the Bay Area constitute core hubs. These are the most established and successful fintech epicenters in the world, home to a plethora of leading fintech companies that are supported by robust technology and financial infrastructure.

Fintech headquarters of note in these core hubs include Paypal, Robinhood, Intuit, Credit Karma, Mercury, FalconX, Square, Stripe, Plaid (Bay Area); and Lemonade, MoneyLion, Chainalysis, Ramp, Guava (NYC).

About half (45 percent) of the U.S. headquarters of fintech companies with more than 100 employees are located in these two metro areas alone. New York has a financial services industry and related occupation concentration at least two times higher than the U.S. average. The Bay Area has a technology occupation concentration at least twice the average. While growth is slower due to their already established nature, these markets secure a significant chunk of VC investment into fintech. At least 20 fintechs in New York City have reached unicorn status.

Core hubs cover virtually every fintech category among their ranks. That said, New York’s growing specialties include decentralized finance, with ConsenSys, Fireblocks, Gemini, NYDIG, and Paxos all headquartered in the area. New York is also a leader in democratizing access to financial services, with Guava, MoCaFi, Goalsetter, and Petal focused on financial equity.

The fintech landscape has dispersed across a broader range of market types, including markets of moderate scale with lower business and living costs. As a historical financial center, home to Wall Street, New York has the infrastructure to provide an incubatory environment for fintech companies. Innovation Lab, an accelerator co-founded by the Partnership Fund for New York City and Accenture, is one of many examples.

The Bay Area, too, covers the gamut of fintech subsectors, but its emerging specialties are artificial intelligence (AI), analytics, and banking. The popular digital bank for startups, Mercury Technologies, is headquartered in San Francisco.

When it comes to talent, there’s a one-two punch involved with core markets: The availability of high-quality talent is greater than anywhere else, but the cost and salaries are also higher than anywhere else.

Looking forward, these areas will continue to provide a fertile ecosystem for fintech start-ups and emerging and mature enterprises.

Established Second Tiers: Los Angeles, Chicago, Boston, and Philadelphia
The established second tier comprises moderate growth markets with populations greater than 4 million. They host 17 percent of all U.S. fintech headquarters.

Fintech headquarters of note in these second-tier locations include StartEngine, Scratch Financial, BlackLine, FloQast (Los Angeles); Avant, Enfusion, M1 Finance, Zero Hash (Chicago); Evertrue, Flywire, Toast (Boston); and Envestnet, cred.ai, Picwell, Benefix (Philadelphia).

These markets have strong concentrations of technology and financial services activity, with moderate to high rates of growth for tech occupations and a financial services industry concentration that is up to 50 percent more than the U.S. average. Many of these cities have active accelerator scenes and prominent universities that feed fintech talent. For example, Boston benefits from the “Brainpower Triangle” of Tufts, MIT, and Harvard.

Emerging Growth Markets: Atlanta, Charlotte, Denver, Dallas, Salt Lake City
Emerging growth markets, which include both large population centers and more moderately sized metros, see moderate to high growth rates for financial services and high to very high growth rates for technology occupations. Fintechs in these regions often see investment from local VCs and financial services companies. Home to startup communities and deep technology talent pools, these areas account for most of the cross-state job creation in fintech, which, since 2016, has been concentrated in the South and Southwest.

A large market, Atlanta has been a payments processing and embedded finance hub since before the dot com boom. Fintech headquarters of note in Atlanta include Kabbage, Momnt, CharityVest, Bluefin, and CoreCard. “Transaction Alley,” a string of businesses along Interstate 85, processes about 70 percent of payment transactions in the U.S. And, Atlanta has notable information technology (IT) talent depth. Georgia Tech, Georgia State, Atlanta University Center Consortium, and Kennesaw State University all nurture fintech talent.

In Charlotte, financial services industry jobs are more than two times higher than the national average and have grown at a rate of more than 30 percent over the last five years. Technical occupations increased by 67 percent over the same period. Fintech headquarters of note in Charlotte include LendingTree, AvidXchange, Paymentus, and Finzly.

In addition to being a banking hub, Charlotte is home to the fintech operations of major financial firms. This includes the fintech division of Bank of America, which is headquartered in Charlotte, as well as that of Wells Fargo and Ally.

Emerging growth markets see moderate to high growth rates for financial services and high to very high growth rates for technology occupations. With its high concentration of IT talent — bolstered by the University of Denver’s Fintech Boot Camp — Denver is an attractive market for fintech startups and companies opening satellite offices. Fintech headquarters of note there include Western Union, Techstars (Boulder), TIFIN (Boulder), and Maxwell Financial, a digital mortgage platform for lenders, which recently relocated its headquarters to Denver from San Francisco. The region is also home to the fintech operations of Charles Schwab.

Dallas’ fintech headquarters of note include Bestow, Deposits, Apex Fintech Solutions, and Gig Wage. The city is emerging as a fintech hub because of its growing tech talent base paired with low taxes and affordable housing. While it lacks the history of Atlanta, it is an emerging payments processing hub.

UT Dallas, which is among the universities that feed talent into the region, offers a graduate certificate in fintech as well as a master’s degree in Financial Technology and Analytics.

Salt Lake City has also seen high rates of growth in both the financial services and IT industries. It boasts a pro-business regulatory environment, as well as incentives and programs that support the growth of startups, making it an attractive location for fintech. Salt Lake City’s fintech headquarters of note include Atomic, Divvy, AvidXchange, and Lendio.

The core hubs, established second tiers, and emerging markets discussed in this article have seen considerable growth in fintech activity. As the sector continues to evolve, these cities — and, perhaps, new areas with similar fundamentals — are primed to capitalize on fintech’s potential as a major economic catalyst in the future.