‘No hard and fast rule’: Fintechs and banks size each other up

‘No hard and fast rule’: Fintechs and banks size each other up

Westpac’s banking services partnership with Afterpay will force fintechs and the big banks to reassess their relationship with each other, a trend that Zip co-founder and boss Larry Diamond says further reinforces the disruption sweeping the financial services sector.

Zip has been directly affected by the deal with Westpac ditching its 10.7 per cent stake in the buy now, pay later company. While Mr Diamond didn’t comment on Westpac’s decision he said that the rise of fintechs has seen established banks take a “mixture of approaches” to innovation.

“There’s buy versus build, there’s partnerships versus building,” he says.

“There have been some banks that have tried to innovate themselves, we don’t think they have done a particularly great job, and there are others that have looked at partnerships.”

“I think you’ll continue to see that right, there’s no hard and fast rule,” Mr Diamond said.

With Afterpay’s shares clicking over $100 for the first time on the back of the Westpac partnership and Zip’s shares trading as high as $7.50, Mr Diamond said investor interest in the BNPL sector is a boost for the entire fintech sector.

“Seeing the success of one particular fintech sector or sub-sector, it galvanises others in their particular sectors to push harder, think bigger and try and do the impossible.”

“There are many things out there and for some of them, the business models are questionable and they are up against some very tough places so they need to try and understand how they can pivot, or find partners for accelerated growth,” he said.

The BNPL sector has been a hit with investors, with a large cohort of providers listed on the Australian Securities Exchange alongside Afterpay and Zip, including Splitit, Sezzle and Openpay.

However, listed small business loans provider Prospa’s co-founder and chief executive Greg Moshal said there’s more to the fintech sector says than BNPL.

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