The sunset of Australia’s mining boom has triggered the birth of a number of new opportunities. Many are in the most talked about Fintech. It’s the word on everyone’s lips, the acronym of Financial technology. But what is it really? It is the technology that is disrupting a number of areas and operations within the financial industry. Just think about the way we may hail a cab through an app or shop online nowadays, Australia’s strong financial industry too is one that is currently undergoing a transformation to meet the 21st century head-on.
Though traditionally fintechs have hailed from places like Silicon Valley, the tables are turning with Australia’s fintech ecosystem gaining momentum. Australia is what many consider to be the perfect trial ground to pilot new technology solutions on. The reason being is Australia’s high smartphone penetration as well as readiness to embrace new technologies. Here’s why Australia could very well become the fintech hub of Asia.
Currently London is home to all the fintech madness within Europe as a result of support from policy makers. Australia’s venture capitalists have traditionally been well-reserved and slow to react to tech start-ups. However, can Australia be the fintech hub of Asia given Prime Minister, Malcolm Turnbull’s ‘absolute commitment to innovation and supporting all imagination and creativity’? With this extra push in confidence and openness to fintechs, it appears Australia is headed in the right direction.
New South Wales-backed fintech incubator, Stone and Chalk along with AMP and Westpac-backed Tyro Fintech Hub are examples of how fintech is rapidly growing and being cultivated within Australia. Just take a look at SocietyOne, Australia’s fastest growing peer-to-peer (P2P) lender that amortizes loans to diversify risk and then algorithmically matching lender and borrower based on a sophisticated credit scoring system. SocietyOne has matched approximately $50 million of loans. Founded in 2011, the company is potentially looking to list on the ASX.
With low capital intensity and a focus on talent, there is plenty of room for fintech companies to join the ASX, especially if only a profit or asset test is required to do so. Other countries have much more stringent tests. This is perfect for technology companies who are not yet making a profit and are investing in R&D. At present, the greatest struggle are the regulatory challenges that come with the wave of fintech disruption.
If Australia is a fertile ground for technological innovation, it is likely that we see more than just investor tax breaks for fintechs in the future.