COVID-19 has been a catalyst for digitalization in financial services.
While few business continuity plans focused on pandemics, most organizations have faced a need to learn on the fly and pivot quickly, with the onset of COVID-19 forcing many companies to rethink their operations, strategies, and business models.
Over the past ten months, urban density in some areas across the country has created additional business challenges. As a result, there have been more discussions about re-shoring, supply chain improvements, real estate and labor costs, and worker productivity in the work from home environment.
The pandemic created an opportunity to spotlight non-traditional destinations for firms looking to shift away from high-density markets. Midwest locations such as Ohio have been building innovation ecosystems to rival their coastal counterparts and can be an attractive alternative.
For example, international fintech firms expanding into the United States have traditionally focused on the country’s east and west coasts. However, locations like Ohio with the sixth largest financial services sector in the United States and a top-four location for bank and insurance headquarters has the partners, customers, and talent to successfully facilitate a soft-landing in the U.S. market.
Ohio is already home to the fifth highest number of Fortune 500 and 1000 headquarters in the U.S., with world-leading financial and insurance names that are either headquartered or have major operations in the state, including KeyBank, Huntington, JPMorgan Chase, Progressive Insurance, Fifth Third Bank, and Nationwide Mutual Insurance Company.
Ohio is quietly producing successful fintech unicorns including Root Insurance, which uses artificial intelligence (AI) to determine premiums and has a valuation of $3.7 billion. Ohio has been successful attracting scaleups like Upstart Network, Inc., a Silicon Valley-based company that created the first AI and machine learning lending platform. Upstart chose Columbus, Ohio for its first major expansion and second headquarters, committing 257 jobs, including software engineers and data scientists.
The ecosystem is fed, in part, by a financial services workforce of more than 245,000 individuals, nearly the size of New York City’s. Ohio’s college and university pipeline produces more than 44,000 graduates annually for the industry. The state is driving innovation through funding from venture capital and accelerators such as Drive Capital, headquartered in Columbus and among the largest Midwestern venture investors by assets under management having recently closed $350 million for its third flagship venture capital fund.
JobsOhio, the economic development corporation for the state of Ohio, is doing its part to help spur innovation, funding a $100 million R&D Center Grant Program, which seeks to accelerate R&D initiatives. This funding gives university students, entrepreneurs, and financial industry titans new ways to innovate and become part a fintech ecosystem pushing the future of financial services. In addition, the state offers lower operating costs that are one-quarter that of New York City and San Francisco for rent and one-half the wage costs with no corporate state tax.
Will there be a big shift away from high-density markets post-COVID?
Only time will tell. One thing we do know is that fintech success no longer means planting the flag in the usual coastal locations.