This week has been a busy week for Australian FinTech thanks to the Intersekt Festival and Collab Collide Summit.
Some of the key themes being discussed at the Summit included:
- Crypto currencies
- Open data
- Regulatory environment
- Digital identity
Here’s key take-outs from the sessions The Churchill Club attended…
Health Check on the Australian FinTech Ecosystem
Foster relationships with the right decision-makers in the Big 4 Banks
- “If you’re in the machine, you’ll be in it forever” (Mike Smith, YBF Board)
- Those relationships need to be with the right people who’ll take you on the journey
The real opportunity lies in developing FinTech solutions to solve back end banking problems
- The real challenge banks face is that they’re encumbered by legacy systems built on accounting models rather than customer focused systems
- Banks know EVERYTHING about us but the problem is their systems aren’t joined up. Why is it that you can buy a flight to Paris using your credit card and then have that same card declined when you check in at your Paris hotel two weeks later because you forgot to call the bank to share your travel plans?
- They need improved back-end systems that reduce costs and improve efficiencies
- The opportunity here is for people who have worked in the banking system to step outside and develop solutions… calling all problem solvers!
- If you’re B2C focused your competing with banks who have mammoth customer acquisition budgets
An attitude of ‘internationalisation’ is key for Aus FinTech start-ups
- You need to look abroad from the outset, rather than trying to retrofit into their product down the track.
- Your solution has to be competitive in the US and focused on Asia
- We’re too focused on Melbourne versus Sydney and where’s Brisbane at. The question should be “what’s happening in Israel?”
The Changing Super Game
The opportunity for FinTech in improving customer engagement in superannuation
- The wealth creation model is changing as the ‘get a job-buy a house’ model doesn’t match the reality of millennials in the age of the gig-economy and a crisis in housing affordability
- Technology can be applied to simplify the very complex world of super
- Recent improvements in the competitive landscape and regulatory framework mean rollover and insurance frameworks have now been digitised
- The scary fact – the industry is asleep and don’t believe disruption is happening. According to Mercer’s 2020 Super Fund Executive Report - Change or be Changed, 94% of fund executives do not think pressure from disrupters is a serious risk to their fund's future. Read more:
Regulatory change is required
- Current regulation is so complex that it creates a huge moat currently protecting the industry
- Regulators have failed in trying to create transparency and comparability
- Open data is needed by FinTechs. Data supplied to ASIC and APRA currently is aggregated, making it incredibly difficult to compare products on a like-for-like basis
What’s the future of super in Australia?
- “Super is one of Australia’s best financial inventions… why don’t we export super to the world” (Jess Ellerm, Zuper)
- Product innovation that allows customers to choose investments that reflect their personal values
- Greater improvement in knowledge and transparency of what different funds offer
- Change in the power shift to that of businesses who provide the “plumbing” for super (ie tax, custody, trustees, etc)
- Access to open data from other sources will provide greater power to FinTech disruptors and increase customer engagement
- Customers will continue to care about track record and performance when selecting funds
How are super funds engaging those in the gig-economy
- The rise of the gig-economy and trends in future of work pose a large potential leakage of customers from super funds
- Need products to make it easy to do this – currently nothing really exists in Australia
- Single Touch Payroll should provide framework to make this process easier
- In the US, StockSpots partner teamed up with Uber to develop product that allowed Uber drivers to easily contribute to their super via the Uber Driver’s App
INDUSTRY WARNING – "Superannuation is at Ground Zero… they should learn from the mistakes their colleagues in banking made 4-5 years ago."
Exploring the Future of Payments
Crypto is not the answer…yet
- Blockchain and crypto faces huge issues around scalability, performance, resilience and privacy that still need to be resolved
- Both Canada and Switzerland have investigated using Distributed Ledger Technology for wholesale payments only and both disregarded it as an option
- Which is why in Australia the National Payments Platform (NPP) is being developed
How & when do we achieve interoperability?
- We need to start with standards. Most countries are migrating to ISO20022 for standardisation
- This is just a starting position
On mobile payments
- "We, regulators and industry, need to be mindful that we have younger generations, those under 25, who look at things differently.” (Loretta Joseph, ADCA)
- There’s still key UX challenges around mobile payments. When it comes to splitting a restaurant bill, nothing’s as easy as throwing credit cards down on the table
On credit cards
- Will continue to be used for larger value transactions for some time
- We haven’t witnessed any real innovation in products
- Growth of POS based systems like Afterpay are a response to this lack of innovation
Bec Kempster attended the Collab Collide Summit 2017, as a guest of the Intersekt Festival.