The fintech hub
Lee Watson and I were finishing our catfish at one of the businesses located in what has become restaurant row along Main Street in downtown Little Rock. Watson, with whom I’ve worked on projects in the past, is the founding CEO of the Venture Center, which is located just down the street in the Little Rock Technology Park. His title is now chief innovator.
He wanted to introduce me to a group of people at a table on the other side of the crowded restaurant on this hot July day. Those at the table were in Little Rock for what’s known as the Fintech Accelerator, a program that attracts applicants from around the world who hope to participate in the Venture Center’s 12-week business boot camp. The word “fintech” is used to describe the computer software programs and other technology that support the financial services industry. It’s among the fastest-growing areas for venture capitalists to fund, and Little Rock is positioned to be a hub for the industry.
The capital city’s history with financial industry technology goes back to the founding of Systematics Inc. in 1968 by Walter Smiley, who served as chairman and CEO for two decades. Smiley, a Hope native, graduated from the University of Arkansas at Fayetteville in 1963 with a bachelor’s degree in industrial management, received his master’s of business administration degree from the UA in 1964 and then taught college from 1966-68. He was determined to change the image of Arkansas. Smiley once said: “Creativity is the only thing that’s going to save Arkansas. We’re not going to solve our problems with money because we don’t have enough.”
Smiley attracted the attention of prominent Arkansans such as financier Jack Stephens, and Systematics became a leading provider of financial software and other services for the banking industry. Systematics consistently was ranked by Forbes among the country’s top 200 small companies. Little Rock-based Alltel Corp. purchased Systematics for $550 million in 1990, and the name was changed to Alltel Information Services. Smiley formed Smiley Investment Co. to provide assistance for small businesses. Alltel Information Services was purchased in 2003 by Fidelity National Information Services of Jacksonville, Fla. What’s now known as FIS is the world’s largest provider of banking payment technologies with more than 20,000 clients. FIS still employs hundreds of people in Little Rock.
Last week, Gov. Asa Hutchinson stood beside Gary Norcross, the FIS chairman, as it was announced that FIS has extended its sponsorship of the Fintech Accelerator.
“Our goal is to be a microhub of technology companies,” Hutchinson said.
Norcross said: “It certainly isn’t lost on any of us that 50 years ago there was a small fintech startup in Little Rock, and that company has now grown to FIS.”
Smiley was right. Arkansas will never be able to spend its way out of its problems. If Little Rock is going to reach its potential as the state’s capital city, it will be through the growth of high-tech companies such as those coming out of the Fintech Accelerator. As I talked to those young entrepreneurs that day at lunch (all of whom had great things to say about Little Rock, by the way), I thought about how this stretch of street that city leaders like to market as the Creative Corridor is truly living up to its name with this program.
In 2013, Fast Company released a study that ranked Arkansas 37th among the 50 states when it came to innovation. Another study that year ranked the state 45th for entrepreneurship. Those rankings led a group of entrepreneurs to launch the Venture Center in May 2014 with the goal of accelerating the growth of technology-based startup companies while also increasing the base of technical talent in central Arkansas.
Little Rock has the infrastructure that’s needed to be a hub for fintech startups. There’s not only the large FIS presence, there’s also the fact that the city is the home of investment banking giant Stephens Inc. The state’s banking sector is healthy with Bank OZK (formerly Bank of the Ozarks) building a headquarters campus along Arkansas 10 in far west Little Rock and Simmons Bank filling up what once was the Acxiom building in the city’s River Market District.
“My vision is that Little Rock will become the center of the universe when it comes to financial technology,” said Watson, who at age 33 speaks the language of the young entrepreneurs participating in the Fintech Accelerator. “We have people from coast to coast who fly into Little Rock to see what comes out of the accelerator program. This is the place they choose when they want to see the next generation of technology. There are representatives of private equity funds along with senior managers from some of the nation’s biggest banks. There’s nothing else that’s even close to what we do. A startup fintech company can come here and build relationships with more than 40 of the most innovative banks in the country. Our model is different from what you find elsewhere, and the outcomes have been phenomenal.”
The 10 companies that completed the 12-week program came from as far away as Poland and Switzerland. Those 10 companies were selected from a pool of more than 280 applicants from 47 countries.
“If the whole city would rally around this, the scale could be incredible,” Watson says. “We have to build a brand for Little Rock that’s all about innovation and entrepreneurship. This program gives us the chance to do just that.”