Tennessee’s FinTech Industry is Undergoing Significant Growth

Authored by Project FinTech Team

What is FinTech? 

If we borrow the definition from the experts at EY, a financial technology company or “FinTech” is an “organization combining innovative business models and technology to enable, enhance and disrupt financial services.”  

There are both household name brands and a myriad of minute, iterative innovations that fall into this category. There are disruptive technologies, like Venmo, which have so successfully permeated our daily lives, that we use them as verbs. Then there are also the dozens of application programming interfaces (APIs) working behind the scenes to enable the price of stock to update minute-by-minute on the screen of your smartphone. 

Why FinTech is Significant

As of 2021, 78% of Americans are using digital banking platforms regularly. Moreover, approximately 70% of American consumers report that mobile banking through their smartphones is their primary interface with financial institutions.

Beyond banking, consumers now regularly invest, borrow, and trade through apps such as Robinhood, E-trade, and Affirm. In 2021, the stock trading app Robinhood had $98 billion in AUM (assets under management) and a global user base of 16 million individuals. 

These numbers only continue to increase in the Post-Covid era of touchless interface and the maturity of the digitally-native generation. 

Keep in mind, financial technology has revolutionized more than consumer-facing processes. Within the financial sector, more efficient means of managing funds, risks, and clients have emerged. Business-to-business interactions have been expedited through streamlined platforms and digital processes. The size of the global fintech market was estimated at $110.59 billion in 2020 and is expected to reach $699.50 billion by 2030.

Let’s Talk Tennessee

Currently, there are an estimated 186,000 Tennessee residents working in the Finance and Tech sector for over 15,000 entities. For the past decade, the state has outpaced its neighbors across the southeast for job growth in this sector. Tennesseans are working for established entities, like AllianceBernstein, UBS, First Horizon, and EY. However, in increasing numbers, they are also working for startups and fintechs servicing or possibly disrupting established entities. Examples of Tennessee fintechs include: Alto IRA,  Core10, and Confirmation, plus adjacent companies such as HireRight, or Built Technologies. 

Future Opportunities

The Tennessee FinTech industry is poised for exponential growth in the coming years due to the collective commitment of the local startup ecosystem and regional stakeholders.

There are also several key factors that further set Tennessee up for success: 

Tennessee Abounds with Talent 

The state continues to attract talent, yet again landing in the Top 10 States by Growth in 2022. Tennessee is also home to numerous universities and colleges that offer specialized programs in technology, finance, and entrepreneurship. This provides a ready pool of talent for FinTech companies to tap into, enabling them to quickly scale and grow their businesses.

Tennessee is Pro-Business 

There are intentional and dynamic entities operating within the state, including initiatives of the Department of Community & Economic Development, including the support organization LaunchTN, plus tax credits and Pro-Business legislation. 

Tennessee is Getting Organized Around FinTech Innovation 

Innovation efforts are being driven by industry stakeholders such as the Tennessee Bankers Association to galvanize research and development. Schools like the University of Tennessee, Tennessee State University, and Vanderbilt University are continuing to strengthen general innovation best practices through programming like the Mid-South Innovation Corps Hub. 

We’re excited to begin this journey and we invite all to join our new FinTech Network today.