FinTech: UK Vs Australia
by Matthew Parker, The MitchelLake Group
Having recently moved from the UK to Australia, I have been excited to observe and experience first-hand some of the differences between the UK FinTech ecosystem and that of its Antipodean cousin.
I do not, by any means, pretend to be an expert, but I have had the privilege of working with and alongside some of the most exciting FinTech businesses and individuals across multiple markets. Any observation I am able to draw comes from a place of passion and sincere enthusiasm as well as a helpful dose of experience. So without further ado, let’s compare and contrast.
The UK hit its stride at the perfect time, can Australia catch up?
The UK represented the perfect melting pot for FinTech to explode. For starters, London is a global financial hub filled with a population who have a growing distrust of banks. Paired with being a technology epicentre and an increased confidence in European investment and you have the perfect disruption climate.
In 2013, UK & Ireland’s FinTech sector was at the start of an exponential growth curve, accounting for over half of all European VC Investment, at roughly USD $700 million. The following two years represented enormous growth, and the UK enjoyed the peak in global FinTech investment, which has since subsided through 2016 (KPMG, Pulse of FinTech report). All of this enabled the UK to thrive as a leader in FinTech globally with Funding Circle, a peer-to-peer small business platform, and TransferWise, a money transfer service, emerging as the UK’s first technology Unicorns.
Conversely, Australia has struggled in many of the aspects that have allowed the UK to thrive. Australia’s banks have a strong foothold and are nimbler than their UK counterparts. The investment market is more cautious than it was in 2013, and their global financial presence is not as strong as other hubs around the world. Furthermore, the FinTech ecosystem here is younger. To put the timeframe into context, the Tyro FinTech Hub (Australia’s first FinTech hub) opened in December 2014, and Stone and Chalk, an independent non-profit FinTech hub in Sydney, only opened its doors in August 2015. In comparison to Level 39 (the UK equivalent) who opened in March 2013.
That being said, Australasia is punching well above its weight, and there is a lot of promise here. Companies like Prospa (recently secured a $60million Series B), AfterPay (listed on the ASX), Tyro (Australia’s newest bank) and Xero (New Zealand’s technology darling) were all listed in KPMG’s FinTech 100 in 2016.
Australia’s banks hold all the cards
“The Big Four” banks in Australia are some of the most profitable globally, representing 2.9% of the country’s GDP, more than any other in the world. They hold a 90% market share and vitally, they maintained profitability during the GFC. Furthermore, their combination of retail focus and being technologically forward thinking has meant they continue to provide a largely positive (or at least progressive) consumer experience. All of this combined means they have an extremely strong grip on the customer.
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