Atlanta is increasingly being recognized as a global fintech center
70% of all debit, credit, and prepaid card transactions in the US are processed in Atlanta
Global digital payments are expected to reach a remarkable $8,059.3 billion by 2023.
What may also be surprising is that about 70% of all debit, credit, and prepaid card transactions in the US are processed in Atlanta, giving it the nickname “Transaction Alley”. This leadership in payments, as well as the presence of leading firms in online banking, treasury services, and lending innovations, have led to the city’s development as a hub for financial technology.
Such prominence didn’t happen overnight. Columbus Bank and Trust, predecessor to today’s Synovus Bank, employed one of the first mainframe computers to process credit card accounts in the 1960s, resulting in the eventual spin-out of credit card processor TSYS.
Key legislation in 1987 removed usury laws in Georgia for credit cards, making it a safe place to host such operations for many customers. Also during the 1980s, better branch-banking laws caused many bank headquarters to migrate to North Carolina, leaving Atlanta with a surplus of knowledgeable banking executives. These executives paired up with the tech community to build such leading financial technology companies as CheckFree, Digital Insight, and S1 that led the way in consumer adoption of Internet banking.
According to the Technology Association of Georgia’s 2020 FinTech Ecosystem Brief, there are currently 170 fintech organizations located in the state. Fintech employs more than 38,000 Georgians, with the revenue of the top 15 Georgia-based public fintech companies exceeding $114 billion. Some of the leading fintech businesses based in metro Atlanta include Global Payments, NCR, Equifax, Fiserv, InComm Payments, and many others.
Fintech companies continue to find Atlanta to be an especially desirable place to set up shop, largely due to its considerable IT talent pool fed by Georgia Tech and other top research universities, its business-friendly taxation, and the presence of Hartsfield-Jackson Atlanta International Airport. Importantly, there is also a considerably lower cost of living compared to traditional innovation hubs such as Silicon Valley and New York.
One thing is certain – fintech continues to grow. With the onset of the global pandemic in early 2020, demand for digital, contactless forms of payment has accelerated, speeding the adoption of new and more innovative technologies. Following are four trends that I believe will be prominent in fintech in 2021, in Georgia and elsewhere:
1. Changes in trust models, particularly the establishment of greater security around digital transactions
As more transactions go digital, cybertheft and identity fraud are becoming increasingly sophisticated as well. As a result, traditional logons and passwords, even when protected with two-factor authentication, are becoming insufficient. Technologies that work to further validate a user’s identity, especially in a frictionless manner, will continue to grow in demand.
OneTrust and Trust Stamp are two Atlanta area companies that recently achieved capital raises for their respective privacy, security, and authentication solutions.
2. Extending financial services to the underserved
Many consumers do not have access to traditional financial products for a number of reasons, from low or irregular incomes to poor or no credit histories.
Metro Atlanta-based Instant Financial is an earned wage access platform that gives employees instant access to their pay after each shift, while VIVA Finance, also in Atlanta, offers affordable loans based primarily on employment information rather than credit history.
3. Integration of payment solutions into vertical industries
Fintech companies are creating payment solutions to fit the workflows and needs of specific verticals, such as education or healthcare. Instead of using horizontal payment modes like Stripe or Square, such industries now have solutions designed specifically for them.
One such example is metro Atlanta-based GoFan, which is a digital ticketing platform specifically designed for use with high school events.
4. Continuing growth of cryptocurrencies
A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit. Unlike traditional money transfers, there is no bank-settlement process but instead the transfer occurs in real time.
Metro Atlanta-based Ternio is one company giving blockchain and cryptocurrency real-world banking applications. As our society becomes increasingly more digital, such tokenization of capital and other assets will continue to rise.
Fintech solutions already have and will continue to meaningfully alter how commerce is conducted, encompassing both small-value and high-value transactions. With each innovation that occurs, we move a step closer to a cashless, real-time financial world.
There is little doubt that Atlanta as well as Georgia will increasingly be recognized as a key center for fintech innovation, and a great place to start and grow a business.
About the Author
Dan Drechsel is a General Partner for Panoramic Ventures. Prior to joining in 2018, he was involved in growing and operating a series of public, private equity and venture funded innovation companies.
He has held numerous executive level, sales, marketing, and engineering positions at enterprise software, FinTech and tech enabled services enterprises, including SAP, ADP and Dun & Bradstreet both in the US and internationally.
His largest exit came when, after leading hands-on operations as COO, he was instrumental in helping pivot Security First Network Bank, an online bank, into a Software-as-a-Service (SaaS) online banking business. S1 reached $225 million in revenue and a market capitalization of nearly $9 billion. He also successfully exited Global Energy Decisions to Vista Equity.
Dan has an MBA from Mercer University and a B.S. in Industrial Management from the Georgia Institute of Technology.
Dan has served on non-profit boards at Mercer University and the Technology Association of Georgia Education Cooperative. In his spare time, he enjoys sailing.
Disclaimer: GoFan is a product of Huddle Tickets, which is part of the firm’s investment portfolio.
