Innovation

Smaller US Cities Foster More Payments Innovation

Smaller US Cities Foster Payments Innovation

The next chapter in the history of digital payments and commerce is being written in technology incubators – but not only those shops run by merchants and brands, or even in Silicon Valley. Smaller towns keep trying to up their game, and could provide fresh fuel for innovation.

Take New Orleans, home of the PYMNTS bureau of jazz and crawfish. Officials there are in the midst of an effort to draw technology-minded entrepreneurs to the culturally rich city, and those efforts have led to fledgling payments- and commerce-focused endeavors. A nonprofit incubation-and-acceleration organization in that town called The Idea Village earlier this year welcomed nine technology startups into the fold, which include mentorship and advisory assistance. Among the participants are a company developing a “big data” platform to improve freight logistics and digitally focused efforts devoted to child support and rent payments.

Payments Impacts

Befitting the status of New Orleans as one of the centers of the global energy industry, much of the incubation and acceleration efforts are focused on technology related to gas and oil. That said, it’s hard to run any type of incubation-and-acceleration effort these days without at least some of the activity touching upon digital payments and commerce in some way. Those efforts might include robotics, drones, artificial intelligence, machine learning and other forms of technology that will eventually find their way into retail and payments at some point – underscoring all the ways in which digital payments and commerce intersect with so many other parts of the global economy.

Evidence of that comes from such smaller cities and towns as Boulder, Colorado; San Diego, California; Pittsburgh, Pennsylvania; and Krakow, Poland, all of which routinely make lists of the best cities in which to start tech-focused firms and which are considered relatively friendly for technology incubator and business acceleration programs. In New Orleans, the city reportedly had attracted at least 45 high-tech startups since 2006 (when post-Katrina rebuilding was taking place).

In-House Work

Of course, a more direct way to foster innovation in payments and commerce – at least for the players in the global digital economy – is to simply do the work yourself, in-house. A recent example of that comes from Foot Locker. It has become the latest big brand to embrace the concept of retail incubators, joining such companies as Walmart and Target in hopes of fostering innovation that will translate into more sales and customer loyalty. Called “Greenhouse,” the incubator, which was introduced at Foot Locker’s recent investors’ day, “encompasses three new facets: collaborations, concepts and a think tank – all aimed at feeding new ideas into the organization,” according to Footwear News.

Beyond innovation, incubators — whether based in specific cities or operated by specific companies — can also help brands reach new groups of consumers in better ways. That’s the story with Target. Its new incubator program – called Target Incubator, plainly enough – is, according to the retail chain, “designed to help Gen Z entrepreneurs-in-the-making nurture and grow their better-for-people or better-for-the-planet businesses, even if they haven’t launched yet.”

Providing a fuller retail experience is part of the foundation for the incubator effort. “To truly engage our next generation of guests, it’s not enough to create great brands. We need to cultivate communities and have real conversations,” said Rick Gomez, executive vice president and chief marketing officer of Target. “So we’re using our expertise and brand power to connect with our young guests, amplify their voices and support their great ideas for the future.”

Innovation is the name of game for payments and commerce, as laggards risk being kicked out of the industry altogether, left in the dust by more aggressive rivals. And now, smaller cities are hoping to play a bigger role in fostering that innovation as digital ecosystems continue to emerge and grow.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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