Last week Finextra embarked on an unusual Twitterview. Instead of a mostly linear stream of Q&As with one or two people, we decided to moderate a discussion, or Twitter-chat,
with a group of start-ups, consultants and advocates who represented the city of Atlanta, Georgia in the US.
It seems Atlanta has been a hotbed of banking innovation since the Federal Reserve pioneered electronic banking there in the 1950s. A low cost of living, combined with a sophisticated financial technology programme out of Georgia Tech University has created
a fertile ground for start-ups in the FinTech space. According to the Technology Association of Georgia (TAG) there are around 200 financial technology companies operating in Georgia. That makes it probably the third largest technology centre in the US.
Intrigued to learn more about the 'Payments and core banking centre of the Universe', Finextra and a group of plucky Altanta types spent a hour discussing Atlanta, payments and the precieved lack of tech talent in the US.
(For a list of those involved, please follow this link).
For those of you who missed (or who were confused by) the Twitter-chat last Wednesday, below is a transacript of the conversation.
I have edited some of the tweets, slightly, just to aide reading.
Welcome everyone to the Finextra Twitterview. Today we are chatting with the FinTech community in Atlanta, GA, USA. Question 1...
@Finextra: Q1. Atlanta has been called the ‘FinTech' capital of the US - how many firms operate out of Georgia?
@kpetralia: The Fed Reserve Bank of Atlanta pioneered electronic banking in 1957, which established banking technology in Atlanta.
@atlantapayments: TAG FinTech, the group is pulling together the ecosystem tracks; close to 200 firms in the space.
@tjsweeney: TAG reports that Georgia generates $34 billion in FinTech revenue.
@simEngine: Equifax is also hdqt'd in ATL.
@tjsweeney: Atlanta is also home to three of the top 10 of IDC's 2009 FinTech 100 (or four of top 10 with major operations here - Fiserv/Checkfree). Atlanta is home to three of the top five merchant acquirers.
@Finextra: Q2 How does this number compare with FinTech in New York or Silicon Valley?
@TAGthink/@MelanieBrandt: In the last state of the industry report, TAG determined Atlanta was the third largest FinTech market based on revenue.
@TAGthink/@MelanieBrandt: In terms of #s of HQs & business units, GA ranks 8th. But, our co's skew larger than those HQ'd in CA, for example.
@Finextra: Q3 What is ‘Technology Square'?
@johnbhayes: Real estate complex built with joint public (Georgia Tech) and private funding. Houses the GT management school, a conference center/hotel, and private offices.
@atlantapayments: Tech Square is near Georgia Tech, [where] many of the startups, VCs, etc. are housed.
@SBatTTV: Technology Square is a location just off the GT campus where a concentration of all types of tech companies reside
@simEngine: Tech^2 (and its associated SBUX) is the spiritual home of most all startups in ATL. Few are actually located there.
@Finextra: Q3a Is Technology Square more the 'spiritual' home of FinTech in ATL rather than an actual address of companies?
@johnbhayes: I don't think so. It is just where many young companies are located. Also where Advanced Tech Dev Center is.
@kpetralia: Not sure there is a 'spiritual home' for FinTech; those companies are all over Atlanta. More of a talisman for startups overall.
@TAGthink: Technology Square is the home to @ATDC, so of course that makes it a strategic location for any technology sector. Tech Square is also home to the Georgia and Georgia Power Economic Dev departments, who have been integral in FinTech recruitment.
@tjsweeney: Norcross (which is 'OTP' in ATL-speak) is [also a] major locale.
@TAGthink: Tech square is also home to TAG, which has large FinTech representation on its Board. Mark Johnson w CheckFree & Joan Herbig. ControlScan have both been the Chair of the TAG board in recent years, for example.
Tech Square is also the birthplace of @twitpay, come to think of it.
@Finextra: Q4 What are the advantages to being outside a global fin centre?
@atlantapayments: Atlanta is known for two things, traffic and FinTech. If it's in Atlanta, it's usually 20 minutes away, but spiritually close.
@SBatTTV: Atlanta's focus is on the tech to make Fin services go vs providing the traditional fin services like NYC, Charlotte, etc...
@kpetralia: The complementary focus on data security in Atlanta is also important for continued FinTech growth (ISS, etc.)
@atlantapayments: Legacy big bank city + tax credits + favorable banking regs + tech center.
@simEngine: I'll second the advantages of cost of living. Makes it easier to hire good talent for a startup. An "outsider" perspective helps aid innovation. You're not as encumbered by domain knowledge and history.
@Finextra: Q5 How big a feeder is GeorgiaTech (Uni); are most companies launched/staffed by alums?
@atlantapayments: Biggest feeders tend to be experienced FinTech Execs from larger companies + startup entrepreneurs getting together
@tjsweeney: Lots of companies and graduates in and from GT's ATDC program - http://atdc.org/. @simEngine is an example.
@Finextra: Q6 What's special about the GeorgiaTech programme that encourages entrepreneurship?
@johnbhayes: Attitude. State funded @ATDC at Georgia Tech is one example of emphasis on starting own company. Also, engineers are frequently entrepreneurs, whether GATech, MIT, Stanford, etc...
@simEngine: ATDC does a tremendous job of encouraging start-ups. GT itself has long recognized the commercial value of advanced research (e.g. GTRI). I'd guess that 50% of ATL startups are founded by GT alums. More have GT employees.
@Finextra: Q7 Why the focus on payments and core banking?
@kpetralia: Started in the 50s with the Fed Reserve Bank in Atlanta pioneering electronic payments...and it stuck.
@tjsweeney: ATL focus on payments and core banking covered well by @jcyates
in this post on @TAGthink: http://bit.ly/byhOJy.
@kpetralia: Equifax was the first credit bureau to automate credit reporting in the 70s.
@Finextra: Q8 It's been written that Georgia's banking restrictions ended up encouraging FinTech development, why? Why not follow the banks?
@SBatTTV: When many big banks left ATL, the talent remained that ran tech ops.
@kpetralia: Georgia was one of the few states with a high usury cap, which encouraged alternative banking structures.
@atlantapayments: Legacy delivery = brick/mortar banks (high cost); low cost will be with tech; with the right know-how startups can win.
@johnbhayes: By saying that payment processors could operate in GA without a bank charter, many moved or expanded here. Every state was perceived to have restrictions. GA moved to front w/ law saying NOT have to be a chartered bank to process.
It just happened. National Data, TSYS were early payment companies in the 60s. Retail Credit (now Equifax) > 100 years ago.
Charlotte got the lead on Atlanta with larger banks due to statewide banking allowed in NC. FinTech may lead ATL to front.
@Finextra: Interesting, so bank processes could operate without a bank in ATL - hence no mass migration to NC or NY for tech talent. Correct?
@johnbhayes: Yes. It was important at a time when banks could not cross state lines, as they can today.
@Finextra: Q9 There's often talk of a lack of native tech talent in the US in general; agree, disagree?
@simEngine: Disagree. US produces plenty of native engineers, they just stop doing tech work after 5-6 years. What US lacks is viable career path to support engineers and other tech talent continuing to do tech work.
For an engineer, a startup is probably the most viable way to advance your career while still doing tech work.
@TAGthink: Disagree. The talent in Georgia is consistently cited as the number one reason companies like @NCRCorporation have relocated here.
@atlantapayments: ATL has FinTech domain expertise in its tech talent; that is the biggest knowledge hurdle in FinTech advancement. ATL is drawing tech talent from around the world, as more companies are putting FinTech ops here
@johnbhayes: That is true. But, China and India are producing 10X the number of engineers as US. US peaked in undergrad engineering grads in 1985. But, we have opportunity to attract people from everywhere
@simEngine: For an engineer, a startup is probably the most viable way to advance your career while still doing tech work.
@tjsweeney: Lack or abundance of tech talent is relative - US #'s not like India, China; advanced capital markets encourage US tech innovate
@Where2Bank: Native Talent: ACH was pioneered at ATL based Servantis (now part of CheckFree). Key players just founded Where2Bank.com.
@TAGthink: We must reverse. Efforts from orgs like @wit_atlanta and the TAG Education Collaborative, to encourage students in STEM, are key.
@simEngine: Compared to China/India, yes, we produce fewer engineers, even in relative terms. But assuming we produced 5x the number of engineers we do now, where would we employ them? US values marketing, sales, and management far more than tech
@Finextra: Q10 Any numbers on ‘non-Georgia natives' starting up/relocating in Atlanta compared to natives?
@SBatTTV: we have had start up CEOs relocate here to tap into the exec talent in FinTech ATL companies bring in lots of capital from outside GA, they are less capital intensive in nature.
@kpetralia: Look at FDR's recent relocation to Atlanta. That was a huge boon.
@atlantapayments: Don't have stats, but my guess is most are coming to ATL for FinTech business and staying for quality of life
@johnbhayes: ATL population is very fluid. More non-natives than natives. People come for college or job transfers and stay
@Finextra: Q11 How does Atlanta compare to other US tech regions; Silicon Valley & Boston 128? Is ALT = scrappy upstart?
@johnbhayes: Less expensive, great quality of life, less local capital
@kpetralia: Hard to compete with Silicon Valley, but to atlantapayments' point-quality of life is key for tech companies looking to relocate.
@tjsweeney: Scrappy upstart not bad description overall compared to Boston / Silicon Valley, but ATL unique in focus and presence in FinTech;
@DCoxATL: The broad base of business here is growing also. FinTech companies have easy access to customers in many industries.
@atlantapayments: ATL=growing start up mkt; FinTech specifically you have to show industry knowledge AND entrepreneurial skill.
@TAGthink: Re: compare - great quality of life, cost of living, talent base, R&D universities and tax credits, can get to/from in one flight...
@simEngine: I would expect Atlanta to really compete with Boston within 10 years, but overtaking Si Valley is a pipe dream. Right now, ATL building support structure for startups (ATDC, VC, etc). Add that to quality of life and you have a winning
@Finextra: Q12 Has the region attracted a lot of VC interest?
@kpetralia: Not as much as startups would like, in my opinion. West Coast VCs are especially reticent.
@TAGthink: Cardlytics and ControlScan are great examples of ATL FinTech companies who have recently received VC funding
@johnbhayes: Many VC firms visit here to invest, not many located here.
@Finextra: Q13 When will we start seeing M&A & consolidation within the Atlanta start-ups?
@johnbhayes: Active M&A for many years. Skylight Financial, Check Free, Digital Insight, etc.
@tjsweeney: ATL has already seen strong M&A. Many big exits. ATL's FinTech innovation pipeline is especially robust - expect a steady long-term diet of M&A here.
@TAGthink: Already some M&A - Fiserv's acquisition of CheckFree had huge, positive effects. eg many new investors in the space.
@Finextra: All right guys, here's the big question: Q14 What's the most innovative banking product to come out of the Atlanta hothouse?
@kpetralia: CheckFree/online banking is obviously huge if taking a long-term view (much as I want to say Kabbage...) SFNB is another great example - the world's first internet bank. Mint.com is powered by Yodlee, whose aggregation technology was pioneered
by Vertical One right here in ATL. Bought by S1 in 1999
@atlantapayments: Checkfree is the biggest; Firethorn mobile; Kabbage is neat; there are at least 5-10 others I think we'll see too.
@johnbhayes: I am very biased, but I believe the trade credit outsourcing by FTRANS can transform the American economy.
@SBatTTV: Let's not forget Cardlytics. I think you can look at FTRANS's AR outsourcing, CRE's hosted payment page, CHeckFree's online Bill Pay.
@Finextra: Well, I've seen someone already Tweet that they are relocating to ATL. Thank you guys for a very friendly Twitter-chat
@DCoxATL: Thanks, all. Happy to provide information about TAG FinTech at firstname.lastname@example.org
@TAGthink: Thanks everyone - happy to provide any additional information via Melanie@TAGonline.org