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August 23, 2021 FOCUS: Banking & Finance

Talent, quality of life, incentives boost CT’s growing fintech industry

PHOTO | CONTRIBUTED Greg Schwartz and Carey Armstrong are the co-founders of real estate-focused financial technology company TOMO, which recently announced it will move its headquarters to Stamford.

When TOMO Networks was getting off the ground last year amid the height of the COVID-19 pandemic, it likely had the connections and resources to set up a home base wherever it wanted.

A real estate-focused financial technology firm founded by former Zillow executives, TOMO’s principals have links to Seattle, where Zillow’s corporate headquarters is located, and the company could have opted for the hustle and bustle of Manhattan or Brooklyn.

Cromwell-based fintech Payveris is in the process of being acquired for $152 million.

When it was time to set down roots, however, TOMO selected Stamford.

“It comes down to one word — talent,” said co-founder and CEO Greg Schwartz.

TOMO’s team wanted to be near New York City, Schwartz said, and Stamford’s transportation infrastructure will allow the firm to attract highly-skilled workers from the city and surrounding metro area.

“We just met more and more talented folks living in places like Brooklyn, with one or two kids and very intense careers, who were ready for a change,” he said. “We’re in a position to draw people from New York or Boston who just don’t want to sit on the train every day.”

Fintech industry officials, as well as the state’s boosters, have been making a similar case for Connecticut, pointing to its concentration of finance and insurance companies, well-educated workforce, quaint communities and high quality of life. Remote work opportunities, greatly expanded by the still-roiling pandemic, mean that employees can keep their fast-paced, competitively-paid city-based jobs while enjoying the advantages of the suburbs, they said.

“Hartford, and Connecticut generally, have an extraordinary opportunity,” said Peter Denious, president and CEO of AdvanceCT, a nonprofit that works closely with the state Department of Economic and Community Development (DECD) to engage and recruit businesses. “We have a real value proposition for people who don’t want to pay New York, San Francisco and Boston rents.”

Changing a reputation

Connecticut is now home to numerous fintech companies, including Glastonbury-based Payrailz, Continuity in New Haven and Cromwell-based Payveris, which is in the process of being acquired by Washington-based Paymentus for $152 million. Nymbus, a banking software company headquartered in Florida, has an office in Glastonbury, as does Wisconsin’s Fiserv, which also has a site in Wallingford.

And the state has been especially active in recruiting out-of-state companies since the springtime lull in the pandemic, announcing the relocations of Philip Morris International (moving from New York City to Fairfield County) and manufacturer ITT Inc. (White Plains to Stamford) and plans by New York-based fintech iCapital to open a new office in Greenwich.

Mickey Goldwasser, vice president of marketing and chief of staff at Payrailz, credits the state with working to foster the fintech sector through multiple government and non-government channels. Goldwasser pointed specifically to DECD, which manages financial and tax incentives; Connecticut Innovations, the state’s venture capital arm; and the Connecticut Technology Council, which represents thousands of area tech companies.

“In some cases, Connecticut could be a hard sell,” he said. “But there are a lot of resources here. The state is doing what it can to make itself more attractive to businesses.”

Payrailz provides white-label payment technology to credit unions and banks. The payment system relies heavily on artificial intelligence to mine the massive amount of data accumulated by financial institutions, looking for ways to be helpful.

Payrailz employs more than 50 people.

TOMO is expected to receive “earn-as-you-grow” incentives from DECD that provide grants in arrears as job-creation targets are reached.

The firm currently has around 115 employees, and between 40 and 45 are based in Stamford, while others work remotely.

“Things are very different now from the reputation Connecticut had years ago,” Schwartz said, noting the warm reception his company has received not only from DECD Commissioner David Lehman but also AdvanceCT and the governor’s office. “They’re working to build a real community here.”

Denious said AdvanceCT has worked to win over financial tech firms by stressing the importance of proximity to the Greater Hartford area.

Peter Denious

“You have what we might call ‘old-line’ financial services companies in Hartford and they’re investing in technology and looking for solutions,” he said. “What better ecosystem to tap into? The most important players in the world are sitting right there.”

Also factoring in are the state’s colleges and universities, contributing to a well-educated workforce, and a relatively diverse talent pool, which has taken on new importance for many large employers.

UConn earlier this year announced it was launching a 36-credit fintech master’s degree program to cater to the growing industry.

Aggressively emphasizing those advantages, Denious said, may be the best way for Connecticut to shed its old image as unaccommodating or disinterested in new ventures or too expensive to do business in.

“We’ve had this reputation, but let’s make sure people understand what we offer,” he said. “I would argue that we haven’t made people aware of what’s here. Could that move the needle significantly? The answer is yes.”

‘Flight to comfort’

Still, Connecticut’s most powerful selling points might be attributes that have not changed, including its bucolic small towns and plentiful state parks and forests.

“Connecticut has a lot to offer,” Goldwasser said. “It’s a great place to live. There’s a human factor to this.”

Denious said the contrast between major cities and Connecticut — cramped and densely populated versus more spread out and private — has been given new significance by public health concerns.

“It’s the pandemic effect,” he said. “The question now is, can these big companies get their employees to get back on the trains, into a 50-story building, sitting in close proximity to many other people? Connecticut offers an alternative to that.”

According to Denious, AdvanceCT has emphasized that point in recent discussions with New York-based companies the organization is looking to win over and draw to Connecticut.

Schwartz has noted a corresponding change in consumer preferences through his work at TOMO, which develops products aimed at streamlining the homebuying experience.

“What you’re seeing is a flight to comfort,” he said. “Here, you can have a backyard and great schools but you can also commute to work at a company that’s energetic and modern.”

Schwartz predicted that “winning combination” won’t lose its appeal to would-be city transplants any time soon

“Stamford and Connecticut in general seem to be having their moment, and we expect that to continue,” he said.

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