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The State of Fintech in the Midwest

Updated: Feb 5

The Silicon Prairie is quickly gaining more recognition for its role in technology innovation and its rising status as a fintech epicenter. The region is home to some of the leading global financial institutions. The region is best known for its trading roots and is still home to CME and CBOE, and leading trading & tech firms such as Jump Trading, Trading Technologies and TopstepTrader and Dough. The Midwest financial service industry is not a one trick pony. NorthernTrust, Discover Financial, US Bank, BMO and FifthThird  are leading banks that call the Midwest home. Top midwest insurance companies include Northwestern Mutual and State Farm, but let’s not forget some of the prominent lenders that also hail from the Midwest: Quicken Loans, Flagstar, and Fairway.


The region provides fertile soil for startups, too; Crunchbase reports that Midwestern fintech companies have raised $4.3 billion since 2000, with Chicago alone accounting for more than half.


Even with a powerhouse roster of innovators, the Midwest sometimes gets the short end of the stick  when it comes to recognition, especially in comparison to the coasts. While the east and west coast still dominate in terms of raising venture capital — California, New York, and Massachusetts account for 79% of the $5.3 billion in capital raised in 2018 — bigger funds are eyeing the Midwest, especially for seed-stage investing. This is thanks to, in part, our catalog of fast-rising fintech companies. 


Michael Tomko, founder of Chicago-based CardX, credits another factor for the higher-profile Midwest cities like Chicago have achieved as of late: financial acumen. 

He remarked in a recent Silicon Prairie News article, “Chicago is home to world-class talent, but what is most important to us is that Chicago has a business community focused on profitability. Unlike many startups based on the coasts, CardX has shown strong per-unit economics from our first accounts signed.”


Wheat from Chaff: The Silicon Prairie Gaining Fintech Notoriety


The Silicon Prairie is gaining momentum as a breeding ground for fintech giants and is beginning to garner the recognition it deserves as a potent player in the fintech industry. Both fintech veterans and newer entrants are sprouting up across the Midwest, each contributing unique domain expertise that bolsters high-powered growth and entrepreneurship within fintech. 


Notable activity in 2019 includes: 


Chicago-based Halo Investing, which offers a structured note platform open to all types of investors, closed a Series B funding round in June of last year for $12 million, bringing their total funding to $15.1 million


St. Louis-based FinLocker, a software tool for individual consumers seeking to improve their financial position and literacy, raised a $10.389 million round from the St. Louis Arch Angels and other undisclosed investors in 2019. 


Chicago-based CardX, a Chicago-based FinTech company focused on removing fees from credit card transactions, raised $2 million from Pace Financial Group in 2019. 


Nebraska aimed to elevate its notoriety in the space with a two-day, fintech-focused conference called Flyover Fintech, which was held November 11 – 12, 2019 at Lincoln’s Pinnacle Bank Arena and the UNL Innovation Campus.


Answering the increased demand for financial skills rooted in data and technology, Omaha’s Creighton University launched a new Finance and Technology (FinTech) Major last fall. 


Des Moines-based Dwolla beat out 3,500 organizations to claim the 2019 FinTech Breakthrough Award for Best B2B Payments Product. Dwolla helps businesses move money through the ACH Network, avoiding credit card fees and costs associated with paper checks. 

These represent just a sampling of a bustling year for fintech in the Midwest but are also a welcome augury of what the future holds.  


Chicago Home to Healthy Crop of Fintechs 


It comes without surprise that Chicago is the nucleus of fintech activity in the Midwest. Some of the leading global financial institutions and commodities exchanges, including BMO

Harris, Northern Trust, Chicago Board of Trade, Chicago Mercantile Exchange and Chicago Board Options Exchange call Chicago home. Newer fintechs have also planted roots in the city, including major players like Allstate, Aon, Avant, Braintree (acquired by PayPal in 2013), Discover, Envestnet, and Morningstar call Chicago home. 


Chicago slid into the #8 spot in the 2018 Global FinTech Hub Report, produced by The University of Cambridge’s Judge Business School et. al. Chicago earned its spot in the top ten for both overall ranking as well as Fintech Industry Ranking, though it dropped down to #24 in terms of Fintech Consumer Experience Ranking. It fared a little better in the Fintech Ecosystem Ranking, earning #12 out of 30. 


What does this mean? For starters, Chicago effectively outranks Singapore, Hong Kong, and Paris (among others) as a financial service center. Considering we’re home to more than 20,000 financial institutions and the fact that 6% of the workforce is rooted in the financial ecosystem, this makes sense. 


Deloitte’s Connecting Global FinTech: Hub Interim Review 2017 report also included Chicago in its list of new fintech hubs, represented by FinTEx. Chicago received an Index Performance Score of 20, indicating that the location is more conducive to fintech growth than many of its counterparts. 


Chicago is well-positioned to continue its growth as a nest of fintech innovation, thanks to its knack for creativity, its financial services-minded workforce, and —  perhaps most importantly — its central location. Don’t forget that Midwest vibe; we’re friendly and we love collaboration. Our access to accelerators and government initiatives present ample opportunities for private, public and government organizations to work together towards growth. FinTEx is proud to be a representative entity of Chicago’s exciting future in fintech. 

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