March 2016 — Office Properties Quarterly —
Page 15
F
or a rapidly growing worldwide
phenomenon that is bring-
ing about significant change
within the financial services
community, it is surprising that
the term “FinTech” still is relatively
unknown. At the confluence of finance
and technology, FinTech is defined
as “an economic industry composed
of companies that use technology to
make financial systems more effi-
cient,” according toWharton FinTech.
The term can encompass a wide
array of financial services ranging from
payments, investments, financing,
insurance and more. Companies such
as TransFirst, CacheMatrix and P2Bin-
vestor all identify with the FinTech
industry in Denver. Much of FinTech’s
hype is attributable to the fact that the
industry is taking on the established
banking, money lending and money
management institutions by easing
payment processing, reducing fraud,
creating cost savings and enhancing
financial planning through the use of
technology.
“The power is being pushed back to
the consumer,” said PlatformManager
Fletcher Richman with GalvanizeVen-
tures, a seed-stage venture capital fund
that invests in startups. “Automated
financing, also known as roboadvising,
is on the rise.”
FinTech is not disrupting the finan-
cial services industry per se, rather it
is accelerating change by introducing
innovation. In this article, we’ll exam-
ine three ways these startups are shift-
ing the industry landscape, including
changing the demographics, altering
the real estate needs and prompting
large-scale financial institutions to
rethink and invest more in their tech-
nological capabilities.
First, FinTech
companies found
a demographic
niche in the mil-
lennial population.
The industry tar-
gets “digital-native
millennials,” or
so-called Henry’s
– high earning, not
rich yet – who often
are passed over by
traditional wealth
managers, according
to an article from
Business Insider.
“Millennials are
often against the
idea of using a phys-
ical banking facil-
ity to conduct their
banking activities,”
said Richman.Young
people prefer finan-
cial applications
they can access
digitally from home,
work or on the go,
he said.
The challenge
these firms face
in competing with
large banks and
other traditional
financial institutions is that the capi-
tal investment from the millennial
population is not significant enough to
be solely independent.Young people
may be attracted to the flashiness of
FinTech companies, but compared
to the older generation, they lack the
financial assets needed to sustain a
business.
This has prompted the industry to
partner with traditional financial insti-
tutions to fully maximize their market
share and profitability.Today, many
FinTech firms and traditional financial
services companies are combining
their competitive advantages – joining
the capital and experience from tra-
ditional banks and money managers
with the innovation and technology
from the FinTech side.
Second, FinTech is starting to shift
the real estate priorities of the finan-
cial services industry. Many companies
identify as startups and participate in
a culture built around innovation and
creativity, which greatly influences
what they desire in an office environ-
ment.
“Startup FinTech firms, in particular,
are drawn toward an open, shared
office space that offers a flexible short-
term solution, such as a Galvanize or a
WeWork,” said Richman.
After these startup companies
become more established, their office
needs will evolve. As firms outgrow
shared office space, they tend to
gravitate toward an open plan with
plenty of communal meeting areas to
promote collaboration. Given FinTech
companies rarely are client interfac-
ing, the majority of the capital is spent
on technology rather than expensive
office build-outs. As a result, these
firms tend to have fewer business
costs related to labor and real estate
versus large brick-and-mortar financial
institutions.
Since FinTech companies service
their clients online, their real estate
priorities often focus on talent attrac-
tion rather than obtaining a space to
impress clients.With talent in mind,
Hank Cox
Executive vice
president, CBRE
Occupier Advisory
and Transaction
Services, Denver
Mark Floersh
Senior associate,
CBRE Occupier
Advisory and
Transaction
Services, Denver
Leasing Market
Courtesy Galvanize
Galvanize is an example of shared office space that many startups turn to initially.
