Fintech finds itself disrupted as forces of consolidation strike
The consultancy industry’s urge to claim brand ownership of fintech in all its different guises is almost as powerful as the rise of fintech itself. McKinsey & Co is the latest example, stating with its usual gravity that fintech is itself maturing and entering a period of rapid change; in other words, the disrupter is now being disrupted. It’s easy to be cynical, but seriously, what would you expect? That said, the global management consultancy has presented some useful data on a number of trends, including valuations, to support its thesis. Examining 44 fintech companies valued at more than $US1 billion, McKinsey found that the spikes in valuation that occurred […]
Fintech start-up Airwallex chipping away at the major players
Technology companies do not have to reinvent the industry they address – sometimes they can take a small slice of an enormous industry by being faster and cheaper. The Melbourne start-up, Airwallex, is a case in point. Offering flat-fee pricing for foreign exchange transactions will not instantly challenge the big players but given that forex sees a global daily turnover of about $US1.4 trillion ($1.9 trillion), the year-old business does not need massive market penetration to be highly profitable. “There’s 230 million foreign exchange transactions per month,” says chief executive and co-founder of the company, Jack Zhang. A former IT engineer for the big banks, Zhang says Airwallex uses some […]
We need plans for when robots are in driver’s seat
Financial services companies, including technology-oriented fintech start-ups, are emerging to challenge the roles of banks and the large financial institutions. Fintechs are rapidly transforming and disrupting the marketplace by providing digital or “robo-advice” using highly sophisticated algorithms operating on mobile and web-based environments. Last month, the Minister for Revenue and Financial Services, Kelly O’Dwyer, announced the Turnbull government’s intention to introduce professional standards legislation to set higher competence and ethical standards for human financial advisers — a move that is already under pressure from the robo environment. While the financial advice sector has expanded and matured over the past two decades, fuelled in part by new technologies, the regulatory framework […]
Fintech fund Reinventure seeking riskier investments
Armed with a $50 million cheque from Westpac and many lessons from their first fund, Danny Gilligan and Simon Cant are dialling up the risk. Not the type that raises eyebrows in banking, but rather trying to get more blockbuster returns out of the more mainstream fintech industry, even if that means failing often. “If you look at the data out of the US, the greatest risk as a venture capitalist is that you don’t take enough risk,” Gilligan told The Australian in their first interview since the founders of venture capitalist group Reinventure raised their second fund. “The worst-performing VC funds in the US, 50 per cent of the […]
How your broker’s performance numbers mislead you
by Doug Morris, CEO, Sharesight The human brain is easily conditioned. Do something for long enough and even the strangest things begin to appear normal. Online brokers don’t set out to deceive but the simplistic way they report performance has a similar, normalising effect. If your returns have been presented in a particular way for long enough, the figures become right even when they’re wrong. This is a problem for Sharesight as much as it is for the clients of online brokers. Accustomed to seeing the most basic reporting in their account, they load their data into Sharesight and struggle to understand how two sets of figures can be so […]
Fintech platform ‘wasn’t trying to disrupt’ broking industry
The CEO of a fintech platform that sparked controversy in the broker channel has said that the company never intended to disrupt the mortgage broking industry, but instead “bring innovation” to it. Speaking at a fintech event in Sydney earlier this week, Vince Turner, the founder and CEO of the digital mortgage service uno., clarified the platform’s intentions and thoughts regarding the third-party channel. Mr Turner said: “As far as the distribution of mortgages and mortgage broking, it’s an industry that I wasn’t trying to disrupt, but to bring innovation to. “We’ve already brought a wealth of innovation to the industry, and this is how [we] feel like it should […]
Logging on to the future of financial advice
For hundreds of thousands of investors around the world, the future of financial advice is already here. There is as much as $US300 billion ($392 billion) of funds under the management of robo advisers – computers powered by algorithms that can buy and sell on your behalf – with that figure expected to rise to $US2.2 trillion by 2020. To put that into perspective, these robo advisers could buy every company on the Australian Securities Exchange and still have a trillion dollars left over. While not all robo advisers have the authority to buy and sell, and others are rebadged offerings, the benefits of digitising and automating some of the […]
Fintechs must jump many hurdles on the road to disruption
Bendigo & Adelaide Bank was one of the first Australian banks to invest in fintech start-ups. In 2012, Bendigo announced a $1.5 million investment for a 15 per cent stake in Adelaide-based NoQ, a joint venture with former Adelaide Crows AFL player Brad Moran. These days “NoQ” (no queue) provides independent supermarket and liquor retailers with e-commerce solutions. Bendigo managing director and CEO Mike Hirst has said there are excess profit pools among the diverse product range of the Aussie banks that could be targeted by single product-focused fintechs such as NoQ. Some big investors say the inexorable forces are clear. Successful fintech innovators are cutting costs and improving service. […]
