“Fintech” means, simply, “financial services that are delivered through technology.” It includes online banking, machine learning and artificial intelligence in financial settings, even cryptocurrency.
For investors, innovators and consumers, it spells not just easier access to capital but it is, many say, also lowering the barriers to entry for new businesses.
As America’s credit card capital, Delaware is uniquely positioned to be at the forefront of this rapidly growing industry. Members of Delaware’s financial community are keeping a close eye on cryptocurrency, blockchain and other technologies that are well on their way to revolutionizing the world of finance — and in the process, making sure the First State continues at the cutting edge of fintech developments.
Delaware’s financial technology landscape is varied and impressive. JPMorgan Chase & Co. has 10,000 employees in Delaware, a quarter of them focused full-time on technology. The Delaware Board of Trade, based in Wilmington, is a fully automated, auto-execution online trading platform based on new technologies like blockchain and crowdfunding. Startup firm Lyapunov Technologies is generating excitement at the University of Delaware — the two grad students behind it apply robotics engineering principles to financial markets, creating a completely new approach to risk management.
Combine all that with Delaware’s rich history in banking and financial services, and you have a winning formula.
1. Fintech companies are making major moves in Delaware. Online loan provider SoFi purchased Claymont-based Zenbanx and is looking to hire 400 workers in Delaware by the end of 2018. JPMorgan Chase announced plans to hire more than 1,800 Delawareans for its technology divisions between 2015 and 2019.
Source: Delaware Online, Technical.ly
2. Between 2015 and 2020, employment in Delaware’s financial services industry was projected to grow 8.4% — compared to 1.6% in the U.S. overall.
Source: Delaware Growth Agenda
3. During the Great Recession, Delaware’s financial services industry greatly outperformed the U.S. as a whole, growing almost 22 percent between 2010 and 2015. ID
Source: Delaware Growth Agenda
Perspectives on Bitcoin:
In late 2017, Bitcoin currency was worth $13,860 and had a market cap of $237.62 billion, according to online statistics firm Statista. The total number of Bitcoins in circulation was just below 17 million in mid-April.
Delaware became the first state to embrace blockchain, a technology underpinning Bitcoin, with the launch of the Delaware Blockchain Initiative. However, while blockchain is showing some promise as a storage system, Bitcoin itself is only beginning to mature. Here are some perspectives from Delaware’s fintech experts:
1. Bitcoin, in the eyes of one Delaware-based observer, is still very early in its development — the underlying protocol, the maturity of businesses operating on that protocol and the regulatory scheme around it all, says John Collins, founder of First State Fintech Lab. “My guess is, over the next year, it will probably mature faster than it has in the past nine years,” says Collins. “Bitcoin is a good example of a pure, open financial network that has not been available before. What regulators are trying to figure out is how to mitigate the risks while also allowing innovation to flourish.”
2. Jim Kelly, formerly of ING and Capital One, sees the cryptocurrency as a technology in search of a market. “The idea of using blockchain to mine coins and create a store of value — in my humble opinion, it’s way overblown,” Kelly says. “I like the technology for how it can be used to better secure information as opposed to creating this currency out of thin air.”
3. But Shawn Sloves, a board member at the Delaware Board of Trade (DBOT), thinks his firm will be well-positioned once regulatory questions are settled in a few years and cryptocurrencies become available to trade. “Since none of the crypto securities are ever going to qualify to be in an exchange,” Sloves explains, “it’s going to require them to come to the Over the Counter market, and DBOT is going to be able to support that.”