Paving Silicon Alley with FinTech Ideas
New York's Silicon Alley, the East Coast counterpart of California's Silicon Valley, is growing steadily. Innovation Lab New York, launched in 2010, aims to accelerate its FinTech developments. Credit Suisse, appreciating the importance of new technologies for financial services, has been the program's partner since its early days. "These are win-win opportunities," says Frederick O. Terrell, Vice Chairman of the bank's Investment Banking and Capital Markets department.
How we look for jobs and the way companies recruit talent may all soon change. A three-year-old startup company, with a little help from Credit Suisse and a unique fintech incubator program, is transforming the hiring processes by marrying data, neuroscience and machine learning.
The company, Pymetrics, recently secured its second round of financing. Thanks to 2.5 million US dollars from global human capital consultant Mercer and Khosla Ventures, the startup appears to be well on its way to reinventing the job search process using game-based recruiting and self-assessment tools.
Pymetrics has gotten to this point, in part, because of the FinTech Innovation Lab. The program was launched five years ago for New York City to target and incubate early stage growth companies that are developing cutting edge technology products for financial services customers.
We have the opportunity to mentor finalists in the program and help them develop their businesses.
Frederick O. Terrell, Investment Banking and Capital Markets
"Our goal is to redefine the way the job market works," says Frida Polli, co-founder and CEO of Pymetrics. "Right now it is highly fragmented and we think the best tools out there are just search tools – all the big job boards. There's nothing in the way of recommendations and we want to change that. We want to be the recommendation engine. We think we're best equipped to do that because we assess people's potential and not their experience.
"We became involved in the FinTech Innovation Lab in 2014. That sponsorship was critical in helping us secure our latest round of funding. It was critical because obviously the science piece was why we got funded the first time but after that people want to see if there's adoption and the potential to move forward. The fintech companies we met through the program constituted a big segment of our clients."
Other Lab participants include Narrative Science and Digital Reasoning. The first is making headlines for automating journalism. Started by former journalists, the company extracts and builds news stories from stock quotes and statistics that can be sent to clients. The second, Digital Reasoning, a leader in cognitive computing that develops programs that teach computers how to understand and analyze data and language, opened an office on Wall Street in 2014 to serve financial services clients. The firm was recently named to Fast Company magazine's Ten Most Innovative Companies in Data Science.
How Does the Innovation Lab Work?
Sponsored by the Partnership for New York City, a public-private partnership comprised of CEOs from 200 of the city's leading businesses – including Credit Suisse and Accenture – the Innovation Lab is funded by an investment affiliate of the organization. Credit Suisse was an early participant and adopter of the initiative and one of a handful of companies that donated 2 million US dollars to get the Innovation Lab off the ground in New York. The bank is involved in similar regional accelerator programs worldwide as well.
"The FinTech Innovation Lab was essentially designed to be an accelerator program that would take a company in the early stages by providing input from financial and operations experts," said Frederick O. Terrell. "These companies would be better off because they would be getting an accelerated path to growth through relationships they wouldn't otherwise have. So the Partnership Fund is the catalyst to creating more activity in the financial services technology sector through these companies."
Mentors and Chaperones
Companies that are accepted into the program are mentored by sponsors and exposed to business leaders and experts who can help accelerate their development.
"Here at the bank, participants are getting feedback from executives who procure financial services products, and feedback from traders who use these products," said Terrell. "They're also getting feedback from our bankers about the future of the company and the best route. For many they're having their first dialogue with investment banks that can take the company to the next level.
"These are all win-win opportunities. We win as a potential customer because these are companies that can make our operations better. We win again because these are investment opportunities for our NEXT Fund in Asset Management. And we win because these are potential clients who are very early-stage companies in the very hot technology business."
The process of mentoring is largely coordinated by the CS Fintech Innovation Lab Chaperone. In the Americas it is Nick Toro, in London, Scott James, and in Hong Kong, Ofer Halevi.
"The chaperones introduce the Fintech company to senior leaders and subject matter experts within the Business and Technology departament where they get a first-hand go at pitching their products for potential use by Credit Suisse," said Toro, who heads the Global Markets Architecture Program Office. "These senior technologists also provide guidance on how they should structure the conversation in a financial services firm and what minimal integration and security requirements these products must meet."
Three Levels of Benefits
For Credit Suisse, the benefits of the accelerator program can be found on three levels – it essentially enables the bank to leverage opportunities to invest in newly emerging fintech companies, consume new technology developed by these companies and build brand awareness in the technology arena.
"We have the opportunity to mentor finalists in the program and help them develop their businesses," Terrell said. "We can adapt newly emerging technologies to improve internal processes and serve clients, and are talking to a number of firms that we mentor to use their technologies internally. And we can advise on next stage growth paths, including public stock exchange listings.
"For us, it's a relatively efficient and inexpensive way to have access to some really great minds in the growing field of financial technology. And we have various ways to take advantage of that connectivity inside the company – the NEXT Fund is a good example. They have looked at many of these companies and in 2014 have actually invested in Digital Reasoning."
"Credit Suisse has been an incredible partner in the success of the FinTech Innovation Lab," said Maria Gotsch, president and CEO at the Partnership Fund for New York City. "Involvement by executives at the highest levels of the bank has enhanced the program's reputation and been invaluable to the companies who have participated, like Pymetrics and Digital Reasoning.
"New York City has all of the ingredients for a booming FinTech sector, including the world's biggest potential customers: international banks who are seeking out innovative tools to grow their business. The important role that banks like Credit Suisse are playing to support tech companies here and grow the sector cannot be overstated."