Bucking the Trend
Ohio is one of the best-connected places for success-hungry fintechs to set up home, says Terry Gore, Director of Financial Services and Fintech at JobsOhio
Perched on the eastern edge of the US Midwest, the state of Ohio is perfectly placed for fintechs to succeed. With easy access to some of the world’s greatest financial services markets and offering a pool of talent, the ‘Buckeye State’ – so-named after one of its indigenous trees – is positioning itself as a valid alternative to Silicon Valley and New York.
Ohio offers fintechs and other financial services providers an opportunity for instant success, perhaps even more so than traditional destinations, says Terry Gore, director of financial services and fintech at JobsOhio.
“It’s due to the unique value proposition the state has to offer in terms of the three things a fintech is looking for – the partners, the customers and the talent,” he says.
Bordering the great Lake Erie and Michigan to the north, Pennsylvania to the east, Kentucky and West Virginia to the south, and Indiana to the west, Ohio is just a two-hour flight from 75 per cent of the US and Canadian financial services industries. It is also on the same Eastern time zone as major cities such as New York and Toronto. This means that fintech and financial services providers can benefit from easy access to key markets.
“Without having the expense and cost associated with being located there, they can still have an opportunity to get immediate customers in Ohio,” says Gore. “We’ve got 200 banks, for instance, that they can potentially partner with. But still just take a short flight and fly over to New York if they want to make connections there.”
JobsOhio is a private, non-profit organisation that seeks to drive capital investment and job creation into the state by encouraging companies to make it their home. Its main sell to fintech firms is that every dollar goes further in Ohio, where they can get the same results and investments as in other, more established financial services centres – but with cheaper rents and lower operational costs.
While much is discussed about fintech innovation in Asia and Europe, Gore believes the US is the best-placed market for creating and fostering tech talent. He puts this down to a number of factors, most notably, access to funding.
“It started with what we saw at the height of this thing in Silicon Valley in California,” he says. “That created the opportunity, with entrepreneurs thinking ‘hey, let’s go to America. There’s funding there to allow me to build my company out’.”
Gore adds that Ohio has plenty of available venture capital funding. “One of the largest venture capital funds, Drive Capital, is located here, and they have been a driving force in helping to really expand that piece of the ecosystem in terms of making funding accessible to various stages of organisations, whether it be early stage or growth stage.”
The perfect recipe
But innovation relies on more than just investment and Ohio offers fintechs the three key ingredients of success: partners, customers and talent.
“They all go hand in hand here,” Gore explains. “You can have access to some of the biggest companies in the world – global companies, Fortune 500 – but, at the end of the day, if you don’t have talent to service them, it’s not going to really do you any good.”
In addition to relatively close proximity to North America’s major financial centres, the state also has the sixth largest financial services industry in the US, Gore points out. It is also number three for top 50 bank headquarters and fourth for top 50 insurance headquarters by asset, according to JobsOhio. Last year, the state also passed legislation that protects companies developing innovative uses for blockchain technology, in a regulatory boost for fintech firms.
“Most people aren’t aware of that huge opportunity,” Gore adds. “A well-established financial and retail ecosystems already exist here, creating, again, that opportunity for immediate success.”
Ohio’s other key offering is talent. “From a workforce perspective, we’ve got 245,000 employees in financial services. That’s nearly the size of New York City’s and larger than the city of London’s. I would also add that, yearly, we’re looking at another 44,000 – that’s graduating potential candidates for the sector.
“When you start looking at the workforce, there’s a lot of potential opportunity, and so it really makes a lot of sense to take a closer look at Ohio.”
The state has long had a reputation for backing and producing, winners. One of its biggest claims to fame is as a bellwether for US elections. Only three presidents in the last 150 years have won the White House without securing the swing state. In addition, Ohio has produced a total of seven presidents so far, a feat beaten only by Virginia, with eight.
Other famous, not to mention groundbreaking, sons and daughters of the state include astronaut Neil Armstrong, film director Steven Spielberg, author Toni Morrison, Olympic gymnast Simone Biles and inventor of the lightbulb, Thomas Edison.
When it comes to fintech, Ohio is committed to replicating such successes by boosting and nurturing its formidable tech talent. “There’s been a collaborative effort really across the board in terms of building out the workforce development. Everything from a state level to the individual, corporate level, but then also the educational,” explains Gore.
He cites the example of leading global financial services company JPMorgan Chase, which has about 20,000 employees based
in the state. “They recently partnered with one of the local universities, Otterbein, and part of that collaboration – around a fintech lab to work on emerging technologies like artificial intelligence and machine learning – has been tied in with the curriculum piece back at the university.”
Meanwhile, science, technology, engineering and mathematics (STEM) initiatives in schools have also helped develop the state’s future tech workforce.
Taking such a joined-up approach seems to have worked. Although JobsOhio – which largely replaced a government department as the state’s main economic development agency – has recently faced calls for greater transparency, last year it set records in new job commitments, payroll and capital investment across all its sectors. In April it announced that it had worked on 266 projects, nearly three-quarters of which involved small or medium-sized enterprises, to create a record 27,071 jobs over the period – a rise of 19 per cent over 2017. Its 2018 results also highlighted record capital investment of just over $9.6billion.
Is there any other Ohioan attribute that could be contributing towards this success? Gore offers particular praise for the state’s diversity: “You can go to the rural and you can go to the urban – all very distinct personalities and a nice drivable distance. You can experience a totally different aspect of the state in a short hour’s drive.”
Such diversity appears to be reflected in the state’s ‘3Cs’ – the cities of Columbus, Cincinnati and Cleveland. Each has its own unique ecosystems.
“Columbus has a huge presence when it comes to banks and insurance companies,” explains Gore. “Then also from a retail brands perspective, L Brands has its corporate headquarters there.”
Meanwhile Cincinnati has an ecosystem that includes consumer products alongside bank and insurance carriers. Procter and Gamble and Kroger, the largest US grocery chain, both call the city home. Finally Cleveland is a leader in bio health, due to the Cleveland Mayo Clinic being based there, and is also trying to build out as a blockchain hub. “Everywhere has its own uniqueness about it,” adds Gore.
But, at the end of the day, it comes back to the three key ingredients of success – partners, customers and talent – which the state offers in spades. When you get to the heart of the matter, it makes a lot of sense to take a closer look at Ohio as a place to build out your business. You’ll get far more bang for your Buckeye here.