Much like the growth of California’s Silicon Valley tech economy, Utah’s Silicon Slope technology boom continues at an unprecedented pace. What may not be as well-known is the flourishing financial technology (Fintech) advancement taking place within Silicon Slopes. Lead by companies such as Apiary Fund, MX Technologies, Lendio, Acima Credit, Onset Financial, and others; the Utah Fintech industry is rooted in a century of financial entrepreneurship and innovation.
Utah’s involvement in the world of high finance developed in the late 1800’s with the formation of the Salt Lake Stock and Mining Exchange. Established by mining tycoon Samuel Newhouse to foster economic growth and resources for Utah’s growing mining industry, Utah’s stock exchange was the third exchange west of the Mississippi – the other two found in San Francisco.
The exchange flourished during a time of widespread prosperity in the Salt Lake City valley during the early 1900’s – almost tripling in size from 1900-1930. The Salt Lake Stock Exchange was instrumental in positioning Utah as a financial stronghold in the West. With the resources of a stock exchange, new business and capital were easy to acquire, and business grew in Utah – new buildings sprang up, new businesses started, and the population soared.
Then came the stock market crash of 1929 causing the United States including Utah to descend into economic depression. The 1930’s ushered in both church and political programs aimed at relieving economic stress, but the situation continued to deteriorate. Jobs were scarce, and foreclosures and evictions jumped.
Headquartered in Salt Lake City, The Church of Jesus Christ of Latter-day Saints (LDS Church) introduced its welfare program, which was a beacon of hope in a distressed financial world. But it wasn’t until the 1940’s and the start of World War II that economic conditions in Utah began to improve. Steel factories and industrial mining gave Utah’s economy a much-needed boost. The Uranium boom in the 1950’s brought new life to Salt Lake’s Stock and Mining Exchange. But it was too little, too late for the old floor exchange.
With its regional influence and emphasis on venture funding for local business, the life cycle for the Salt Lake Stock Exchange came to an end as a new national financial scene began to dominate. But it wasn’t the floor of an exchange that kept Utah’s place in the new domestic financial system; it was a new technology – satellite communication.
In 1962, the LDS Church’s Mormon Tabernacle Choir was part of the first ever international television broadcast via satellite communication to Europe. Hailed as a revolutionary development in communication for its time, Utah found itself at the dawn of technological influence for the growing global financial industry with the discovery you could piggyback a myriad of real-time financial data on the unused bandwidth of satellite communications.
A 1988 InfoWorld article described it best, “Stock market traders across the country are now able to access information instantly from major U.S. exchange floors” via satellite technology produced by Bonneville Communications, a broadcasting company now part of Deseret Management Corporation.
This development ultimately led to an open channel directly into the world’s largest trading floors in New York and Chicago. For the first time, a Utah investor had a front row seat to see every twist and turn of the financial markets via a satellite dish or FM radio transmission in mere seconds.
Bonneville Communications developed two first of its kind financial products for the financial world: Market Center, which allowed investors to receive and parse financial data, and Ensign, which allowed investors to crunch and analyze financial information.
This live, never-before-seen, financial data, quickly drew the attention of entrepreneurs and the financial world creating a new software and technology industry category – financial technology or Fintech. Big Wall Street firms started opening satellite offices in Utah to develop new software on the back of the protocols and language used by Bonneville Communications.
One early Utah entrepreneur, Steve Achelis, nearly single-handedly started Fintech when he transformed the investment world with his Metastock software which gave access to financial charts, analytics, and forecasting to anyone with a computer.
Achelis, who in the early 1980s, realized it was possible for anyone with a personal computer to gain access to the same financial data as the professionals on Wall Street. He quit his mechanics job, bought a computer, and taught himself to write software. Equis International was born, and MetaStock released to the world.
With an easy-to-use graphical interface, Metastock was a pioneer in the Fintech space. It opened the world of finance to individual investors who were now able to track, analyze, and forecast different investments on charts displayed on their personal computers. Equis proliferated until acquired by Reuters, the Australian financial data conglomerate, in 1996. Today, Metastock continues to keep a significant share of the technical analysis software market.
The 1990’s brought a continuation of Utah leadership in the financial world. Major financial companies from Fidelity to Goldman Sachs began setting up operation centers in Utah. In part because of the data communications and technology infrastructure unique in the western U.S., but also in part because of the diversified workforce Utah offered. With the University of Utah, Brigham Young University, and other renowned universities producing top graduates as well as the multiple languages spoken by young graduates, Utah became a natural choice for U.S. firms looking to extend global operations.
In 2001, Todd Crosland formed InterbankFX (IBFX). Recognized as on one of Utah’s fastest growing companies in 2008, IBFX also made great strides in becoming a world-class currency clearing firm – processing nearly $750B in currency transactions annually. As a broker in the foreign exchange market, it was IBFX’s technology that set it apart from the competition – a platform that connected multiple banks and currency transactions around the globe. Trade Station, a subsidiary of Japanese Monex Group, acquired Interbank FX in 2011.
This rich history of financial innovation is the backbone of today’s Silicon Slopes Fintech leadership, which has lead companies to develop new technologies such as crowdsource Fintech used among companies like my business, Apiary Fund. There are many Fintech success stories in Utah, including:
- Apiary Fund formed in 2011 to manage an investment portfolio through the wisdom of crowd intelligence allowing burgeoning fund managers traders to manage Apiary’s money for their profit.
- Acima Credit uses new technology and alternative data sources to identify credit-worthy consumers irrespective of their traditional credit scores to provide point-of-sale financing.
- Lendio uses technology to match small businesses with the financing they need to grow. According to Lendio, 70 percent of the jobs in the U.S. are small businesses.
- MX Technologies uses data-driven money management technology to provide digital banking options for account holders and position banking institutes as advocates for their account holders.
- Onset Financial combines technology and leasing expertise to provide a wide array of funding options to lease large-ticket items.
The world of finance and technology has continued to evolve through the years in Utah bringing with it a wealth of economic benefit and innovation. Much has been said about Utah becoming the fastest growing State, the best place to conduct business, and the entrepreneurship and innovation conducted. Silicon Slopes finds itself as the tip-of-the-sword of this success with Fintech playing a significant role. With the companies and entrepreneurs you find in Utah, there will be continued participation and contribution to this rich legacy the great State of Utah has made to the financial world.
Shawn Lucas is founder and CEO of Apiary Fund. Through technology and education, Apiary Fund develops traders and gives people the opportunity to seek the freedom of flexible income by trading with Apiary’s money.