Mass Fintech Hub, a public-private partnership dedicated to making the state a global leader in fintech, has released a report that provides the first progress assessment of the Commonwealth of Massachusetts’ fintech ecosystem in the years since the COVID-19 pandemic.
The KPMG report highlighted the Massachusetts fintech ecosystem’s significant growth, especially in Boston, and notable transformations as the state experienced a historically challenging and uncertain environment over the last three years. Leveraging perspectives from those within the ecosystem combined with evidence-based metrics, the data illustrated an overall increase in employment in the state’s fintech-related industries in addition to special emphasis on collaboration and partnerships in the ecosystem – all factors that contributed to the fintech-related sector’s leap as one of the fastest-growing industries in the state. The assessment found that between January 2020 to December 2022, employment in fintech-related industries in Massachusetts rose overall, “led by gains in credit unions, colleges/universities, software publishers, and investment banking and securities intermediation,” rising from 197,000 in 2020 to 231,000 in 2022.
“This report demonstrates that Massachusetts has been able to successfully establish a dynamic and thriving innovation hub that is well-positioned to compete with other financial centers around the world,” said Carolyn Kirk, executive director of the Massachusetts Technology Collaborative. “We look forward to building on this progress by listening closely to the feedback from the report and identifying ways to boost our fintech ecosystem in Massachusetts, so that we can become the leading global hub for fintech.”
The study also included the following findings across the five major industry attributes – with specific guidance on ways to further develop and improve the state’s fintech ecosystem:
Talent and culture: Since 2020, sourcing talent in Massachusetts has improved as noted by many respondents, yet opportunities to build on this progress still exist. These include highlighting the diversity of the ecosystem and increasing available resources to the talent pool.
Capital: Ranked fourth in the nation in terms of funding received by fintech companies in 2022, Massachusetts has emerged as a major player in the fintech industry, with respondents indicating potential for improvement of capital availability.
Policy and regulation: While support for policy/regulations and compliance with regulations has improved, with up to a third of respondents in agreement, the survey indicated opportunity to build stronger connections between stakeholders and policymakers.
Infrastructure and technology: The majority of respondents believe that accessing new technologies has improved while noting room for continued growth.
Interconnectivity: Nearly two-thirds of respondents noted that collaboration with other fintech stakeholders has improved from three years ago, adding that the state can continue to improve by prioritizing the scaling of ecosystem activities.
The report contains a series of findings and recommendations that are based on the responses discovered by Mass Fintech Hub’s fintech ecosystem survey, listening sessions facilitated by the FinTech Working Group – a network of leaders representing key sectors in the Commonwealth – and focus group sessions with over 30 stakeholders, hailing from traditional financial institutions, startups, universities, policy and regulatory bodies, accelerators and incubators, and capital providers.
“This reassessment serves as a testament to the astounding progress in fintech innovation across the Commonwealth over the last four years and through a global pandemic – from the formation of the FinTech Working Group in early 2020 to the launch of the Mass Fintech Hub in 2021, to where we are now,” said Mike Fanning, Mass Fintech Hub Co-Chair & Former Head of MassMutual U.S. “We are excited to utilize key findings from this report to inform the direction of our programming and initiatives, and help us reach new heights in 2024 and beyond.”
The detailed report serves as an update and extension of the inaugural study released in October 2020, Now, next and beyond: Analysis of the FinTech Ecosystem in the Commonwealth of Massachusetts. This inaugural assessment of the fintech ecosystem in the Commonwealth of Massachusetts, also commissioned by MassTech, established a baseline reading of the size, scope and activities that define Massachusetts’ fintech sector for benchmarking purposes. That study contained 16 recommendations for furthering development of the fintech ecosystem in Massachusetts.
As a result, in 2021 the FinTech Working Group launched the Mass Fintech Hub to promote collaboration between leaders in Massachusetts and capitalize on Massachusetts’ comparative advantages to help drive growth in the fintech ecosystem. Since then, Mass Fintech Hub has introduced new programming, including fintech career fairs, project-based learning, mentoring programs, bootcamps, corporate-startup collaboration events, angel investment education and ecosystem promotion.
Since its official launch, the Mass Fintech Hub has welcomed over 50 members and hosted over 30 events that included more than 2,000 participants. Although the collaborative is largely focused on Massachusetts-based initiatives, organizations and individuals from outside Massachusetts are encouraged to participate and contribute to the growth and expansion of the evolving fintech ecosystem.
