The rise of fintech—the use of technology and innovation to provide financial products and services—is transforming the financial services landscape and will be a key growth opportunity for the Delaware economy in the years to come. The nearly 48,000 jobs in Delaware’s broad financial activities sector are distributed across firms of all shapes and sizes—with established financial services firms such as JPMorgan Chase, Bank of America, Capital One, WSFS, and M&T Bank operating alongside payments pioneers like PayPal and fast-growth, early- to mid-stage companies like Acorns, College Ave Student Loans, Fair Square Financial, Marlette Funding, and SoFi.
In recognition of the ongoing transformation of the financial services sector and the considerable assets Delaware has to offer in this space, the Delaware Prosperity Partnership, the First State Fintech Lab, and the University of Delaware’s Institute for Public Administration partnered to produce an in-depth report aimed at building a shared understanding of Delaware’s position within the broader national and global fintech landscape, and providing a foundation for ongoing conversations about Delaware’s fintech future.
Global investment in fintech-related companies rose from $18.9 billion in 2013 to $111.8 billion in 2018. The United States accounted for $52.5 billion in 2018, with about 60 percent of U.S. investment concentrated in the Bay Area and New York. Delaware accounted for at least $50 million in fintech investment—approximately 75 percent of all fintech investment in the Philadelphia region—though these figures most likely do not capture significant equity investments in fast-growth Delaware firms like Marlette Funding and Fair Square Financial. Like most regions outside of the Bay Area and New York, Delaware lacks a robust environment of locally-based venture firms, but the state’s base of leading banks could provide a competitive advantage given that corporate venture arms accounted for $4.4 billion in fintech investment in the United States in 2018.
Delaware ranks highly on measures of fintech innovation. Between 2009 and 2018, 199 fintech patents were assigned to Delaware-based individuals and companies, ranking first in the United States on a per capita basis, and fifth in absolute terms.
While large states like California, New York, and Texas are home to the largest financial services workforces in absolute terms, Delaware has the highest relative concentration of financial services jobs of any U.S. state. The financial services sector accounts for 9 percent of all jobs in Delaware, a figure nearly twice the U.S. average. Using the same metric to compare U.S. counties, New Castle County ranks third, trailing only Hudson County, New Jersey (Jersey City), and New York County, New York (Manhattan). Delaware also ranks highly in its concentration of technology workers, ranking seventh in the United States behind Washington, D.C., Virginia, Washington state, Maryland, Colorado, and Massachusetts, and just ahead of California.
The hub of Delaware’s financial services industry—Wilmington, in New Castle County—sits within the seventh-largest metropolitan area in the United States, with nearly 170,000 financial services workers and more than 100,000 technology workers across the metropolitan labor market.
Delaware’s ongoing competitiveness in the evolving global financial services landscape will depend on sustained, collaborative efforts across a range of issues. Supporting continued talent development will be key, with continued dialogue around how to best align education and training programs with the needs of local fintech employers. Embracing a regional view could make Delaware an even more appealing fintech location, with potential efforts focused on making Delaware increasingly accessible to financial services talent across the greater metropolitan area and seeking out opportunities to work more closely with leading institutions such as the University of Pennsylvania, Drexel University, and Temple University. Other focus areas could include exploring innovative regulatory approaches, deepening relationships with venture capital sources, and expanding fintech business networks and incubators to help emerging companies learn and grow.
Delaware has a unique value proposition for fintech firms of all shapes and sizes, and its existing strengths create a strong base for a competitive future. Continued coordination, innovation, and investment by a range of private and public sector stakeholders—including incumbent and early-stage firms, the wider business community, state and local government, nonprofit intermediaries, universities, and workforce training programs—will be critical to position the state as a fintech leader in the coming years.
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