Atlanta has cemented its position as a Fintech hub, as deal activity in the US state increased significantly last year. Consolidation among the leading payment processing firms throughout the world, including Atlanta, is helping the region in acquiring considerable Fintech-focused investments.
In July of last year, Fiserv finalized its acquisition of First Data for $22 billion, meanwhile, Fidelity National Information Services secured a $43 billion deal with Worldpay. Global Payments and TSYS carried out a $21.5 billion merger in September 2019.
Notably, all three of these deals were focused within the Georgia area, which helps to draw attention to the region as an active and rapidly growing Fintech hub.
These deals helped the acquiring organization in complementing its existing capabilities by expanding the range of solutions they’re able to offer to their clients.
A common trend among more established Fintech firms is vertical integration. For example, FleetCor Technologies has finalized seven different acquisitions in the past few years, which has helped the firm in expanding its operations globally and also with its product and segment diversification.
Instead of allocating time and resources into developing new technologies, larger companies are acquiring portfolios of firms that may be able to add value along the chain. Smaller firms that can potentially help scale the operations of bigger companies or can be integrated easily might become attractive acquisition options and lead to future deals.
The steady growth of Atlanta’s Fintech sector is partially due to its progressive business and regulatory environment. The Technology Association of Georgia reveals that there were around 90 Fintech firms operating in the US state in 2016. Now, there are reportedly more than 120 Atlanta-based financial technology companies.
These new Fintech-focused firms have been recruiting a diverse and skilled group of industry professionals. They’ve reportedly employed over 38,000 workers in the area, along with extending support to non-Fintech employees such as lawyers, auditors and business consultants.
Atlanta’s higher education system including Fintech courses offered at Georgia Tech and Georgia State University have helped in supporting the state’s tech-focused industry. The city has been able to produce competent and skilled graduates who have been making positive contributions to the local economy.
Several local Fintech companies have been taking advantage of Atlanta’s business incentive programs by establishing operations in designated Opportunity Zones. New jobs based in these areas can offer companies attractive tax credits of around $3,500 per job, each year, for a five-year period.
Local Fintechs are also benefiting from the US being among the world leaders in conducting digital or online payments. When assessing larger Fintech companies, there appears to be a lot of room for more acquisitions and investment deals.
Five of the largest Fintech firms in Atlanta, including Fiserv, Global Payments, FleetCor, NCR and EVO Payments, reportedly have around $11.6 billion in cash on hand and revolver borrowing. This figure might increase if firms are able to gain access to capital in a more efficient manner. This would depend on whether public and private markets are willing to finance new initiatives.