Fintech in Australia: How to catch the global giants

By Jonathan Jackson. Published at Oct 14, 2015, in Features

In 2014, global investment in Fintech ventures tripled to $12.21BN, up from $4.05BN. According to Accenture this is a clear signal that a digital revolution has arrived in the financial services sector.

Whilst the US leads the way with investment into Fintech businesses, Europe is expanding at a rapid rate with year on year increase of 215%.

But what of the Australian Fintech space?

According to a KPMG report released in October 2014, the Fintech sector in Australia should model a hub based on Level39 in London. This is Europe’s biggest accelerator space.

Four months later the opening of the Stone & Chalk hub in Clarence Street, Sydney sparked a surge in entrepreneurial activity.

KPMG partner Ian Pollari, the co-leader of the KPMG’s global Fintech practice, estimates there are now 200-250 start-ups working around the country all aiming to disrupt the financial services space.

There is no doubt this is a growing industry and according to Fintech Census founder, MoneyPlace CEO Stuart Stoyan, Financial services represents 9% of GDP and is ripe for further disruption.

The first ever Fintech Census which focuses on Victoria, has revealed a strong and thriving community of financial tech companies in the State, but there is concern Victoria is lagging behind and offers poor support compared to Sydney, London, the US, Singapore and Hong Kong.

The Fintech Census surveyed 52 Melbourne Fintech companies, representing more than 500 entrepreneurs about the challenges facing their business.

Following in the tradition of Stone & Chalk, it was the first step towards establishing a collective voice for Victorian Fintech entrepreneurs who have called for greater support from the Government and corporates.

“There has been some great efforts to establish Sydney’s fintech community,” said Stoyan. “We need these efforts to be replicated in Melbourne, so that a robust national Fintech ecosystem can ensure Australian Fintech remains relevant in a regional and global context.”

According to Stoyan the Fintech community is currently lacking, stage funding and clear pathways to partner with Government or corporates. Many in Melbourne also feel that they are lagging behind their Sydney counterparts.

Key findings of the Census include:

  • Split view on regulation, with 50% of Fintechs feeling regulation levels were “just right”, but 40% believing there was too much regulation
  • There is a strong demand from Fintechs to strengthen the Melbourne community and to create a dedicated fintech hub, much like Sydney has done
  • Overwhelming consensus that Melbourne lags behind and offers poor support compared to Sydney, London, the US, Singapore and Hong Kong
  • Fintechs say there are limited VC opportunities
  • Finding key talent remains the most significant problem for Fintechs, closely followed by availability of private funding. Customer acquisition is the key internal challenge
  • General consensus that Government should support Fintech by helping foster an ecosystem for Fintech startups, corporates and government

While more needs to be done in the space, there are some companies that are taking charge.

GetCapital has been around since 2013. It has flown low so far, however recently it unveiled a deal with Alibaba in which Australian importers and exporters can get finance on the platform.

The company believes it can help struggling businesses get working capital to buy their next container of goods sourced through the Alibaba platform, fattening its lending book.

Novatti has listed other rising Fintech companies:

1. Dragonbill: A platform for small businesses to process and receive payments. Every transaction is double-authenticated and ensures small businesses get paid on time and that customers get exactly what they paid for.

2. LiveWire: A social media platform for investors. Financial companies and commentators share insights and start discussions on what’s currently happening in the markets.

3. Moula: Provides businesses with a peer-to-peer lending platform to borrow up to $100,000 in minutes.

4. Living Room of Satoshi: An online tool that allows (Australian) residents to pay any of their utility bills directly using Bitcoin.

5. Pocketbook: An app that links to the user’s bank accounts, credit cards and loans and then keeps track of their spending.

As the financial services industry grows, Fintech companies are playing more of a role. Australia is playing catch up with other nations, but the tide is turning.

“The financial services industry is poised at the brink of changes that will forever alter the way customers view us, what they expect from us and how they interact with us. And Fintech is the driver of that change,” AWI CEO Ben Heap said.

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