Jim Kelly is a pioneer of internet banking. In 2000, he arrived in Wilmington
to start ING Direct; after 12 years, Capital One bought ING, with Kelly staying on as executive vice president for direct banking. In 2016, he retired from Capital One, and since then, he’s been advising and investing in startup companies.
Q: What are some of the most interesting or creative fintech startups you’ve seen people build in the state lately?
Jim Kelly: For most creative, I like the guys at WhyFly [in Wilmington]. They have created a viable alternative to the cable monopoly and have built a solid revenue stream based on a subscription model.
Q: Who would you say is leading the charge in Delaware fintech among the more established businesses?
JK: For this one, I would pick [CEO] Joe DePaulo at College Ave. He has built a successful business and a great team in just under four years.
Q: What advice do you have for young, aspiring entrepreneurs — what does Delaware’s fintech industry need right now?
JK: Delaware’s fintech industry needs more young, aspiring entrepreneurs to chase their dreams. There is a growing network of angel investors that are looking for talented entrepreneurs with good ideas. Co-working spaces like The Mill and 1313 Innovation facilitate early startups with offers of reasonably priced space and built-in networking options. Young people should be encouraged to give their idea a try. Even if the first thought doesn’t work out, there might be a pivot move that could lead to success.
Q: What market trends are you focused on?
JK: There are three trends that I’ve seen in the last two years that have just opened my eyes to a completely new way of doing business. They are: artificial intelligence, application programming interfaces and a next wave of outsourcing.
Q: Let’s start with AI.
JK: I looked at an AI system for fraud detection, which was at least 10 times better than anything currently being used by the major credit card companies at determining not only the likelihood of a fraud, but also reducing the number of false positives that our existing systems return to card companies. In the future, AI will cause the cost of fraud to go way down, which should allow for a better price to consumers for using credit. The bad news is, the computers are so good that it will mean people can’t compete. So the people who are doing fraud detection and fraud mitigation will get replaced by a box that’s better at it, works 24/7 and never asks for a raise.
Q: How about APIs — Application Programming Interfaces?
JK: I see APIs creating a situation where it’s much easier now for companies to deal with each other and work together to build new entities or new services. So the time-to-market for new ideas and new companies is much shorter, and the number of people it takes to actually build a new company is much smaller. … You don’t need 200 people to start an enterprise. You might be able to do it with 15 or 20. That’s a massive change — it just opens up an incredible opportunity for new business formation.
Q: And finally, outsourcing?
JK: I think wave one of outsourcing was finding people to do the work cheaper. A lot of work went offshore — that was outsourcing 1.0. Outsourcing 2.0, in my view, gives a tremendous opportunity for new business formation to get to a scalable platform much faster and much more inexpensively than would have been possible 10 or 15 years ago. And it’s all technology-based. So the outsource is no longer the same job done by a human being in a less expensive wage zone; now the technology exists to complete the task.
Q: What makes Delaware an attractive place to do business?
JK: I think Delaware is turning the corner. Part of it was driven by the financial crisis — we went through a major restructuring in the financial sector, and we took a hit in a lot of areas in the economy in Delaware because we were so dependent on that. But I think there’s a really interesting renaissance of entrepreneurial spirit brewing in Delaware. … We are low cost, we are low taxes, we have an unbelievable talent pool, particularly in the financial services sector, and we have great schools. We have lots of things that are happening that portend well for the growth of entrepreneurial business in Delaware.