Fintech in Utah: A Conversation with the Stena Center for Financial Technology

August 25, 2023

By Erin Farr, EDCUtah vice president of business development

Financial technology, or fintech, is one of the fastest-growing fields in the world, and Utah is a leading location for this innovative and multidisciplinary industry. Tech and finance companies employed more than 180,000 people in Utah as of mid-2022, up 18% from five years earlier, according to an EDCUtah analysis of Bureau of Labor Statistics data. In 2023, Area Development named Salt Lake City among the top five emerging growth markets for fintech in the U.S.  

Now, “a new, multimillion-dollar fintech-education center is Utah's latest bid in a multistate race to become one of the nation's top fintech hubs” (Wall Street Journal). I caught up with Ryan Christiansen, executive director of the Stena Center for Financial Technology, to find out more.

What are the top factors that account for Utah’s expanding fintech sector?

Utah has nice trends working in our favor. First, we have a long history of leadership in the finance and technology industries. Marriner Eccles of Utah served as chair of the U.S. Federal Reserve from 1934 to 1948, and many technological breakthroughs were born in Utah.

Approximately 180,000 people are employed in the finance and tech industries statewide. And the growth is sustainable, with a pipeline of a quarter million students and a 50 percent growth in bachelor's and graduate degrees in the last five years. In other words, our talent pool is growing year over year. This clustering is a big deal. With all the tech and financial talent here, it’s easy to cross-pollinate into the fintech industry.

Since 2020, Utah has seen four fintech exits, each of more than $1 billion. Clearly, there’s momentum and funding to support further innovation.  

Utah’s industrial bank sector is another big factor. The great majority of industrial banks in the country are located here, making for a wonderful talent and knowledge pool. If you consider what’s referred to as “embedded banking” or “banking as a service,” you see a lot of industrial banks moving into that space. Fintechs that don’t necessarily want to pursue a bank charter are “leasing” the bank charter and bank services from industrial banks. That provides a strong foundation for technology to be built upon.

Lastly, you’ve got a state legislature and a governor who are very pro-business, and it makes a big difference.  

How does the Stena Center support Utah fintech companies?

The Stena Center launched in January 2023 with the mission to bring together education and industry to accelerate financial and technological innovation. President Taylor Randall decided that we needed a concerted focus, in part because fintech is a space where you can move from the academic setting to commercialization very quickly, compared to, say, biotech.  

Our bachelor’s program in fintech involves cross-disciplinary collaboration with the College of Engineering, the School of Law, and the School of Business. We also connect industry leaders with academic partners to work on real-world problems. This includes traditional industry research, to influence thought leadership at the regulatory and product levels. Our industry partners are involved in the classroom to help guide students while also benefiting from direct access to up-and-coming talent.

The Center has a venture capital fund for early-stage investment in student, faculty, and alumni ideas and products. Each year, we organize a cohort of about ten companies, combined with an accelerator program. Our goal is to quickly move innovations from an academic setting to the commercialization stage, and students can earn a master’s degree by participating in this process.  

You recently accompanied an outreach campaign to New York City with EDCUtah and the Governor’s Office of Economic Opportunity. In those discussions with executives, how did your audience perceive our fintech sector?

Executives were surprised by the breadth of our sector, and they were surprised by the collaboration taking place between government, academics, and industry.  

I was encouraged by their level of interest. The conversations ranged from, “This is a very interesting discussion, and we’d like to think about it,” to asking serious questions about bringing operations to Utah. Some interest is driven by our business-friendly reputation and by the amount of collaboration our contacts perceived. I thought the trip was going to be a sales job, but it turns out that many people are already sold on Utah. We primarily provided resources and answered clarifying questions.

What are some challenges to fintech in Utah?

The big challenge is industry-wide and not exclusive to Utah. As fintech grows, so does the need for financial-grade security, privacy, and regulatory knowledge. To be honest, that’s not always the primary focus in fintech. Instead, there’s been a mentality of “let’s run fast and break things.” Now, the market is too big and too broad, and fintech companies need to offer their customers the same protections as traditional banking institutions.

On one hand, many banking professionals don’t have the innovative mindset you see in fintech companies, but they do have experience with the security, privacy, and regulatory environment. On the other hand, tech professionals in fintech have been very innovative, but they don’t have as deep an understanding of compliance issues.

That’s the challenge our cross-collaborative degree program seeks to address. We are educating students about banking protections while also retaining the innovative mindset.  

You mentioned research spearheaded by the Center. Can you give some examples?

Some of it focuses on the deposit market and how small banks can gather and retain deposits through fintech-based services. We’re also working on a study of Community Reinvestment Act innovations.  

A third example is what will be an annual overview of the industry, identifying all the fintech companies and fintech sectors in the state, which is not an easy task. Part of the study will look at the wages generated by fintech companies here. Next year, we hope to expand the report to be national in scope. This study will help us understand the drivers of growth – what are the economic, technological, and regulatory impetuses year over year?

Anything else to add?

First, the Stena Foundation – holy cow – their commitment to the University of Utah and this industry is just huge. The Center aligns well with the foundation’s goals of inclusion. Fintech is uniquely positioned to bring underserved groups into the financial marketplace, and that’s important to Steve and Jana Smith.

Two, there are lots of ways to get involved. If you are part of a new fintech company, or an alumnus in the financial services industry, please reach out. Visit the Center’s website to learn more.

Erin Farr

Vice President of Business Development