“Second City” no more… Chicago, Illinois aims to grow a fintech startup community in the U.S. that bows to no other. And the Land of Lincoln’s largest city is well on its way with a growing fintech Illinois payment processing community centered in Chicago.
Not all Illinois fintech startups focus on the Illinois payments processing space, but it’s a natural fit for Chicago startups.
Institutions with household names such as Chicago Mercantile Exchange, JPMorgan Chase, Discover, Morningstar, Northern Trust, and other financial powerhouses were once Chicago startups. They now rank among the most respected financial firms in the world.
Mark Tebbe (chairman of ChicagoNEXT) wrote in the World Business Chicago article Chicago Fintech, the Rising Star in Innovation: “We’re now entering a new age of financial industry transformation based on changes in society and technology, dubbed fintech.”
He went on to describe partnerships among large financial institutions, venture capitalists, and fintech startups that received $450 million in 2016 investments. New developments underway include lending, payment, retail investment, consumer banking, and personal finance.
Why Chicago, Illinois?
Some at Crain’s Chicago Business believe that “Chicago’s ambition to become a 21st-century fintech center is at best limping along.” Others disagree and see value in Illinois payments processing and other Illinois-based financial services.
Brian Barnes, the startup fintech entrepreneur-owner of M1 Finance, relocated from the Silicon Valley to Chicago “because it is without question the best place to launch a financial-technology company.”
Barnes cites as evidence these facts:
- Deloitte and the Global FinTech Hubs Federation ranked Chicago among the top five global fintech hubs. They noted that “Chicago acts as the epicenter for all FinTech activity in the Midwest… is home to two fifths of the top business universities in the US… and over 6% of the Chicago workforce is focused on the financial ecosystem,” including some on Illinois payment processing.
- Fintech and financial services companies account for fourteen percent (14%) of the 50 fastest-growing companies in the Chicago region (per Crain’s).
- Real job growth driven by the financial sector in the city amounted to 3.6% year-on-year as of March 2017 per the U.S. Bureau of Labor Statistics — more than double the growth of the next-highest industry and crushing the 2.2% national growth.
World-class universities and strong job growth signal real depth of talent in the Chicago area. Ultimately, a “deep and stable workforce” represents a must-have-population for startups.
Fintech Startups Build Apps and More
Not all new startup developments turn into consumer financial apps but many do. To get a feel for the variety of fintech startup activity in Illinois check out this 2017 watch list of 50 Chicago startups.
Consumer-oriented startups include:
- M1 Finance produced an app-based service to help consumers manage their money. The app spreads investments across a balanced portfolio to ensure money always works for the consumer.
- Gunslinger Studios is shaking up the mobile gaming sector. They’ve combined mobile gameplay mechanics with traditional. Exiles of Embermark, a one-minute, one-handed multiplayer game played through phones, launches later this year.
Other fintech developments on the list target the insurance, investment, and banking sectors — with many targeted to SMBs.
Fintech Startups Must Look Ahead
As fintech startups productize their developments and prepare to go to market, things get even more exciting and busy. But they mustn’t overlook the importance of signing up with a payments processor who specializes in Illinois payment processing for high risk merchants.
Yes, the “high risk” labels remain a bit longer, as revenues grow and small businesses move up the standard company growth curve.
At this point on the curve, “cash flow is king.”
The quest to find the right payment solutions for a new business may seem both complex and confusing, even for those with strong technical chops. What founders care about is getting products to market and making sales, not learning about payments solutions.
Yet when you take your new product to market, the ability to accept payment cards, e-checks, and perhaps alternative payment methods provides access to the means to generate revenues. It pays to learn the basics and take data security and fraud risk seriously.
Enter the payments processor who’s also a strategic partner for your business. Any good partner starts with understanding your company’s business needs and growth objectives. Only then will he suggest specific payments processing solutions to deliver on both.
When needed, he’ll help you:
- Exploit the right digital channels to drive online and mobile-based sales.
- Secure your business and customers’ data through PCI-DSS Level 1 compliant payment solutions.
- Exploit both domestic and international business footprints, as driven by your business model and growth objectives, providing multi-currency and multi-region support.
Because he’ll be expert in domestic and international payments industry best practices and will help you navigate both.
And he’ll work with you to enable complete fraud prevention, chargeback management, and reporting — along with admin tools for enhanced business protection — so you don’t sink, but thrive. You’ll be able to choose both your level of involvement and his.
If you choose to focus on marketing your business and making sales, he and his team will handle your payments processing for you.
Because he knows that ecommerce business success requires more than great technology. Particularly in the fintech-driven payments space we live in — merchants have unbelievable choices for payments processing, including Illinois payment processing for local startups.