Back to Basics: Navigating the fintech landscape to ensure success
By Marie-Anne Lampotang (pictured), General Manager, Stone & Chalk Group – Sydney
Historically, the financial technology (fintech) landscape of Australia consisted of businesses focused on lending, personal finance and asset management. However, in the last few years, the diversity of the fintech industry has expanded to include payments, blockchain, open banking, insurance and industry compliance. In fact, it has grown from a $250 million industry in 2015 to a $4 billion industry last year. According to the KPMG Fintech Landscape 2022, the amount of fintech companies more than doubled between 2017 and 2021, equating to over 800 companies.
Australia is a powerhouse when it comes to innovative fintech companies. However, as the market grows and becomes more saturated, many fintechs need to rethink their approach on how to build a sustainable company for success in 2022 onwards.
There are three key areas where founders should focus on to commercialise and grow sustainably.
Be crystal clear about the problem you are solving
Jumping on the bandwagon of what successful fintech companies are doing may seem like a ‘get rich quick’ scheme, but it’s important to note that those companies have already helped to fill a gap in the market. The ones that will succeed are the ones that deliver a solution to an actual problem that is clearly defined.
You need to be able to clearly articulate the problem you are solving to the people in your network. This could include investors and future customers – any stakeholder who will have an impact on your journey will want you to be able to clearly articulate why they should invest their time, money or emotion into your solution.
Being surrounded by a network of founders like you is also equally important. Founders need feedback from fellow founders, investors, mentors, customers and other ecosystem participants on the problem they are solving and how they are doing it. Feedback is a gift and should be treated as a good investment in your business.
Are you thinking global?
Although Australia ranks sixth in the world in global fintech rankings, it’s a small country that may not be able to cater to your desire to scale locally. Consider the key differences between a B2C and B2B market, and how your business model aligns with your expectations to scale. Is it built in a way that you could flip the switch and export sustainably? If not, how do you adjust your sails now for a bigger future propelled by overseas expansion, whilst still growing comfortably in Australia?
You may need to prove your value in Australia first to attract interest from customers and investors overseas, but that shouldn’t stop you from planning ahead. Founders should start investigating key export markets well before expansion to ensure they hold a deep understanding of product demand, local customs and intricacies, and for fintechs in particular, the differences in the regulatory landscape
The common thread among fintech founders is the desire to succeed beyond Australia’s borders. Some may be further on the journey than others but the entire journey to expansion requires a great deal of support. The road to successful exporting is paved with more landmines than gold, and it pays to learn from those who have done it before, learning from their mistakes and successes.
Shift the reliance on funding to building customer pipelines
It’s no secret that fintech investment globally dropped significantly in Q2 2022 to US$20.4 billion. Investment into Australia’s fintechs only saw US$1billion in Q2 which pales in comparison to other nations. In fact, Australia wasn’t even in the top ten of nations receiving fintech funding last quarter.
The success of the fintech ecosystem cannot, and should not, be confined to investments and capital raises. It requires a joint effort from government bodies and the corporate sector to boost specific customer driven activity to support the industry. By that I mean buying from our startups and scaleups. It’s not quite as glamorous as announcing a capital raise, but it will keep someone in their job when the chips are down.
Winning new customers should be celebrated in the same vein as funding. It will demonstrate how customers identify and engage with your products, and can also lead to future investments. Businesses can’t keep raising capital without returning a dollar to investors, and you can only be self-sustaining if you build a base of customers that pay you. It’s a chicken and egg scenario, but you should not focus on funding at the expense of building a strong customer pipeline. That’s where the ‘growth at all costs’ model can fall down — because it’s not sustainable particularly where valuations are being slashed everywhere.
