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Australia hopes fintech will be its golden ticket, but it’s not that easy




Will fintech be Australia's golden ticket?
Will fintech be Australia’s golden ticket?
Image: Getty Images for Samsung

Australia’s gone mad for fintech, but whether it will prove the country’s golden ticket as the mining boom dries up is another question.

The industry has certainly captured the Australian government’s imagination, however. A speech can hardly go by without fintech being name-checked by politicians standing in warehouse-turned-startup hubs across the nation.

In the 2016 Budget passed down Tuesday, fintech startups were among the most prominent beneficiaries of federal largesse. The government set aside A$200,000 to promote Australia internationally as a fintech market and it’s considering creating an idea-testing “sandbox”, which will let fintech startups operate without certain regulations for up to six months.

Despite this and further benefits for all entrepreneurs, the government’s emphasis on fintech does not make the ability to create an Uber or Airbnb-sized benefit for the economy any more certain. 

The struggle with growing and crossing borders

The differences in financial regulation country to country is one of fintech’s biggest barriers, making it harder to grow fintech startups beyond Australia’s borders and vice versa.

Rick Baker, cofounder of venture capital firm, Blackbird Ventures, told Mashable Australia he was concerned about the limited potential for scale in Australia’s fintech industry.

“Fintech is not something Blackbird plays in because it doesn’t tend to be global, it tends to be regional because of regulation,” he said. “At Blackbird, our passion is businesses that are global day one, and if we were to invest in fintech, we’d be looking for ones that could attack global markets and be the best in the world, rather than the best in Australia.”

Even U.S. success stories have had a tough time crossing over to Australia because of red tape.

Acorns, an American investment app, spent nine months squaring with Australian financial services regulation before it launched here in February, George Lucas, managing director of Acorns Australia, told Mashable Australia at the time. The stock-trading app Robinhood has also proposed launching in Australia, but financial experts suggested it would have to jump through hoops given its plan to offer U.S. listed stocks.

Image: AFP/Getty Images

On the other hand, having a healthy fintech ecosystem is an important part of supporting entrepreneurship broadly, James Mabbott, head of KPMG Innovate at KPMG Australia, told Mashable Australia. “I don’t think it’s the case that a focus on fintech leads to fintech only,” he said, pointing to businesses that have grown outside Sydney’s large financial services sector.

We should also consider the potential for fintech to make the areas connected to banking more efficient, including insurance, wealth management and superannuation, Alex Scandurra, CEO of Sydney fintech hub Stone & Chalk, told Mashable Australia over email.

Mabbott, who helped establish Stone & Chalk, suggested that while not all fintech startups will easily go global, the technology underlying them could. “If you build a robo-advice engine, then whilst there may be significant regulatory requirements in Australia verse the U.S. verse the UK, the core of that engine may well be something you can sell or license for someone to customise [locally],” he added.

Too close for comfort?

In Australia, many of the top banks have formed venture arms that aim to invest in fintech — a phenomenon that could also prove problematic. While extra capital for the startup scene is welcome, having banking so closely tied to the fintech enterprises looking to disrupt them could create a closed-loop ecosystem. 

For Baker, even though access to the banks’ large customer bases is a significant boon for startups, the point is often to get outside the beltway. “You have fintech startups looking to disrupt the big four banks, and now you’ve got the big four banks owning most of those fintech startups,” Baker said. “Be careful that status quo thinking doesn’t creep into your mission or your execution.”

For Mabbott, a close relationship between the incumbents and startups is not unusual, but its impact on fintech isn’t yet clear. “Corporate venture is not new,” he said. “Financial services companies have looked at what’s happened over the past 10 to 12 years, seen the disruption driven in things like media, and decided a non-participatory approach doesn’t work. 

“Longer term, whether it will lead to tension is an interesting question.”

Ultimately, if Australian politicians have a deep affinity for fintech, that’s all well and good as long as other industries also receive enough attention. Mabbott pointed to medtech or agritech as areas that have significant, cross-border potential. “You’d want to see [Australia] expanding where we place our bets into a number of places,” he said.

When politicians are just as eager to preach the virtues of drones in farming, you’ll know we are getting somewhere. 

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The rise in mobile banking: Bank of America, First National and TD




Share Mobile banking has surged during the coronavirus pandemic, and banks are reacting with enhanced mobile capabilities, new features and educational tools to support the new wave of digital users. Bank Innovation talked with some of the biggest banks across the country to learn how mobile banking has changed in the past five months and …Read More

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Get Wise: Business Banking Gains a New Challenger




Whatever benefits the challenger bank revolution may bring to retail banking customers, the opportunities these neobanks provide to small businesses may be even more significant. In fact, there is a growing cadre of digital-first challengers who have decided to put innovating on behalf of small business banking at the top of their priorities.

One such company is Wise, a BBVA-backed challenger based in San Mateo, California, that announced the release of its premium checking account in the U.S. this week. The new offering, available for $10 a month, enables businesses to earn up to 1% APY on deposits through a combination of a 0.5% base APY and an additional 0.1% for every $1,000 purchase using a Wise debit card. Accountholders get 25 free ACH deposits and 25 free outgoing bank transfers a month, as well as additional payments services. Among the functionalities to be added are remote check deposit, the ability to send digital checks and international wires, and support for Quickbooks.

The new offering comes in the wake of the company’s first major fundraising: a $5.7 million seed round in April led by Base10 Partners and featuring the participation of several other investors including Abstract Ventures and Backend Capital. The company told TechCrunch earlier this year that it has 1,000 business customers, with average workforces ranging from 2 to 10 employees, and “between $500,000 and $5 million in ARR (annual recurring revenue).”

Finovate audiences met Wise last year when the company made its Finovate debut at our September conference in New York. At the event, Wise co-founders Arjun Thyagarajan (CEO) and Suresh Venkatraman (CTO) demonstrated the company’s “small business banking-in-a-box” solution, and previewed additional products and services for small businesses including payments and invoicing.

From left: Wise co-founders Arjun Thyagarajan (CEO) and Suresh Venkatraman (CTO) at FinovateFall 2019.

Thyagarajan founded Wise after a stint managing product for Mojio, a platform for connected cars. Before that he was a classic serial entrepreneur, launching a personal organizer (LivingOrganized), and a pair of password management platforms (TeamsID and Gpass). But a sense that he wasn’t “doing what I really wanted to do” led him to leave the “hot startup” in search of what he called “problems that needed solving.”

“My explorations led me to FinTech and I was pleasantly surprised with the rapid advancements in technology transforming the financial industry, especially in banking and payments,” Thyagarajan wrote on the company blog last summer, looking back on his decision to launch Wise. “It got me thinking: what if we could build a banking product that can deliver on the promise of putting the customer first … And solving real world problems.”

Thyagarajan’s reflections are similar to those his co-founder Venkatraman, who in a companion post observed that Wise’s own experience as a small business trying to secure quality banking services was vindication of the company’s mission.

“The day started innocently enough as we walked into a local bank with all our paperwork in hand,” he wrote. “That was the beginning of a chase around Silicon Valley to find a bank that would take our money and open up an account. Banks would reject us for all sorts of reasons or just ignore us.”

These days, with an new offering, a big investment and a major banking partner in BBVA in hand, it looks like the fintech world might be ready to wise up.

Photo by Jean van der Meulen from Pexels


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Standard Chartered Ties Up with Microsoft




Adding to the big-bank-to-big-tech partnerships announced in recent weeks, Standard Chartered secured a three-year partnership with Microsoft today.

The bank will leverage Microsoft to take a multicloud approach that will port its significant applications to the cloud. Specifically, Standard Chartered is planning to make its core banking and trading systems and digital ventures such as virtual banking and banking as-a-service cloud-based by 2025.

“Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients,” said Group Chief Information Officer of Standard Chartered, Michael Gorriz. “Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners.” Gorriz added that today’s partnership is a “major milestone” in Standard Chartered’s journey to become cloud-first.

Standard Chartered will pilot the launch by moving its trade finance systems to Microsoft Azure. The move is expected to facilitate cross-border trade at the bank.

The partnership extends to Microsoft’s workplace tools. Standard Chartered’s 84,000 employees will be working on Office 365 and communicating via Microsoft Teams.

This news comes during a time of widespread digital transformation across the banking sector. Banks and fintechs are seeking to move their operations to the cloud to update their infrastructure and create a better customer experience. There are two factors driving this change: the global health crisis that has moved many in-person interactions to online channels and the rise of competition from challenger banks.

“Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand,” said Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft. “We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”

Photo by Franck V. on Unsplash


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