Austin’s ecosystem combines government, education and the tech industry

Austin’s rapid growth and highly skilled workforce reinforce the city’s leadership in advanced technologies, including artificial intelligence (AI) and semiconductor manufacturing. Dallas Fed President Lorie Logan returned to the capital of Texas to connect and, in many cases, reconnect with business and community leaders about the state of the technology industry.

She heard about growth among established tech companies in the region and new catalysts for startups. Austin tech and banking leaders talked about collaboration on financial technology, or fintech. All of this came with a constant drumbeat about the search for talent.

“The high-tech sector has become an increasingly important part of our district's economy,” President Logan said at the Headliners Club. “We're at about 5 percent of GDP and 10 percent of overall employment now in the state is related to high tech. Where traditionally we focus a lot on energy and on trade, given our proximity to the border, high tech is growing and growing. There's this ecosystem that's so unique between government, education and tech. Here in Austin, I think that's going to continue to attract companies to the area.” Lillian Mills, dean of the business school at the University of Texas at Austin, moderated the discussion.

Read the latest Austin Economic Indicators.

Deep in the heart of Austin, the Capital Factory connects entrepreneurs, programmers, designers and other technology experts under one roof. The hub aims to foster collaboration and bridge the gap between the private and public sectors.

President Logan toured the facility during her visit to Austin and met with several startups housed onsite, learning about the challenges the companies want to solve and how on-site work helps promote creativity and innovation. One group she met is working on an AI security platform to combat cyberattacks. Another is digitizing documents for companies doing international trade, and a third group helps startups scale their security technology for military contracts.

These innovators shared how they are employing AI in their operations and taking advantage of the rapidly evolving technology to remove unnecessary processes and expedite workflows, boosting productivity growth. They also intend to take advantage of the state’s strong economy to further their market competitiveness. As one contact said: “You can’t be in tech and not have a presence in Texas.”

Read Dallas Fed research on Texas companies using artificial intelligence.

A theme that came up repeatedly in conversations with President Logan throughout the trip to Austin: talent. Despite the introduction of AI and automation, tech firms big and small said talent remains in strong demand. That aligns with recent Dallas Fed research showing strong uptake of AI among Texas companies isn’t having much impact on employment so far. As one tech executive said: “AI won’t take your job, but someone who can use AI will take your job.”

Among financial technology companies and general startups, recruitment is more important than ever to draw talent to Texas. Company leaders said that’s one reason they are located in Austin, to recruit mission-driven technology professionals. Plus, Central Texas remains more affordable than Silicon Valley.

On a visit to Samsung Semiconductor, President Logan heard about the tech giant’s strong veteran pipeline and recruiting partnerships with the University of Texas, Texas A&M and other universities and community colleges. Samsung also develops talent by helping employees learn new skills as technology evolves. When the manufacturing plant became fully automated in recent years, those working on the factory floors had the opportunity to learn new skills to work in the control center that manages the automation processes. Finding the right talent will be important as the company builds a new manufacturing facility outside of Austin in Taylor.

Read Dallas Fed research on the Texas high-tech sector.

Austin companies working on financial technology are finding more opportunities to collaborate across businesses and especially with government organizations and institutions. FedNow, the Federal Reserve’s instant payment infrastructure, is one example. As banking leaders think about payment systems, they are building innovation on top of platforms like FedNow, embracing a new enthusiasm for collaboration.

In a fintech-focused roundtable hosted by Dallas Fed senior vice presidents Tommy Alsbrooks and Emily Greenwald, the discussion focused on the complexities of banking and of combining new technology with legacy systems. As many of the professionals who established the current technology retire, the institutional knowledge of the complex systems will soon depart. That makes the search for the right talent for fintech companies and bank back offices all the more urgent.