Fintech might be a talking point in the Garden State innovation landscape today, but longtime finance professor George Calhoun can remember when the finance industry not only didn’t discuss a tech pairing — it was proud to avoid any conversation involving it.
“About 20 years ago, they were a technology laggard in terms of other sectors of the economy, such as healthcare, which had long since gone full-bore into automation,” he said. “They were proud of doing things by hand and were enjoying the high transaction fees associated with that.”
Calhoun is pleased to report that not only have the past two decades changed the financial sector’s relationship with tech, but also that New Jersey — and his own university home, Stevens Institute of Technology, with its new NJ FAST initiative — has become a focal point in that industry shift.
Calhoun has seen enough recent arrivals from overseas markets and the country’s other tech startup hot-spots, including Silicon Valley, to say unequivocally that the Garden State is already a recognized leader in fintech entrepreneurship. Stevens has been capitalizing on that gravitational pull for several years with its CRAFT hub, or the Center for Research toward Advancing Financial Technologies.
That pandemic-born initiative was the first fintech research center sponsored by the National Science Foundation. Calhoun, who serves as CRAFT’s managing director, said the model of bringing industry and academia together for fintech innovation served as inspiration when New Jersey officials were later looking to establish an initiative that could foster fintech ventures.
“We had a center that wasn’t designed to create commercial entities … our innovation came up to a threshold and then hoped someone would take the hand-off,” he said. “The state wanted to take it and make it big enough to look at developing companies and funding new ventures.”
This ended up being the impetus for the NJ FAST accelerator program, a public-private partnership (buoyed by the support of the New Jersey Economic Development Authority and finance and insurance giant Prudential Financial) that launched with an event in May featuring Gov. Phil Murphy and other leaders.
After a six-month process that involved whittling hundreds of submissions from entrepreneurs down to 14 groups selected to participate in the inaugural program, NJ FAST’s first cohort graduated earlier this month. The graduates included local startups, but also entrepreneurs from Italy, Germany and Sweden.
That global representation — all brought into the orbit of New Jersey business — is a product of the initiative’s connection to California-based Plug and Play Tech Center, which has been named one of the most active investors globally. Tyler Lange, the organization’s director of corporate partnerships, explained their outfit does about 250 deals a year in support of startups.
Admittedly, the group hasn’t had much of a foray into the Garden State market prior to now.
“New Jersey in particular is maybe overlooked, not being one of the major, most-known tech markets,” he said. “But it’s one of those, ‘If you build it, they will come’ scenarios. Already, the New Jersey market has one of the best and brightest fintech scenes. The more we open the funnel wider, adding more business opportunities while doubling down on the things we’ve done well, New Jersey’s scene is just going to continue growing.”
The concept of providing fintech startups with what Lange calls a “soft landing” right out of academia or spun out of bigger corporations through NJ FAST also provides an outlet for the state to make its case to international entrepreneurs as to why it’s a good spot to end up, he added.
As the program welcomes more cohorts next year, Lange expects the breadth of this program will grow over time.
“The combination of the support from the public and private sector coupled with university participation for NJ FAST is something that has blown me away,” he said. “Just the impact we’re able to make with that, and the resources and expertise we’re able to provide, is really promising.
Calhoun’s input was that NJ FAST could serve as a model for partnerships supporting other tech areas, including supply chain, security and sustainability innovations. Healthcare is another obvious choice, he added.
But he also believes there’s still a lot of gaps to address in the financial industry with new solutions, despite how much the past 20 years has transformed the sector.
One of the most basic examples, for him, is the three days it takes to conclude a stock exchange transaction, roughly speaking, is a transaction that takes no time at all to clear and settle.
“That’s what we do in almost every other part of the economy,” he said. “In the financial world, the plumbing is very old, slow and costly still — and it’s ripe for being technologized in a better way.”
Conversation Starters
Reach Center for Research toward Advancing Financial Technologies at: stevens.edu/craft or call 201-216-5000.
Reach NJ Fintech Accelerator at Stevens Institute of Technology at: stevens.edu/nj-fast or call 201-216-5000.
