Partnerships driving the local fintech sector
Financial technology startups are growing in Australia, from less than 100 in 2014 to approximately 579 companies today. Many financial businesses see this as a direct threat, but if our country is to have any hope of building a world-class financial services technology industry, the future lies not in competition, but in collaboration. We are already seeing the local attitude change, with a recent PwC report finding that over 82% of financial institutions expect to increase fintech partnerships in the next three to five years.
By partnering and collaborating with smaller fintech startups, established companies can accelerate industry growth and push the capabilities of both parties forward. Australia has a unique fintech ecosystem, with impressive talent and the much-needed capital. By embracing the fintech partnership model, we can solidify our position as a leader in the global fintech space.
Fast moving and technology-oriented, fintech startups have the ability to innovate on a level that larger institutions could only ever wish for. Specific fintech solutions require an element of agility and flexibility, that are more easily provided by smaller and focused companies.
Working as part of a small team gives startups the flexibility and ability to pivot, something that larger companies lack. They are faster to react and ultimately, are able to provide superior solutions when compared with more traditional institutions. Fast moving and technology-orientated, FitBit have disrupted the conventional payment system with the launch of FitBit Pay in collaboration with ANZ, Commonwealth Bank and NAB. By leveraging existing wearable technology, this partnership with FitBit ensures the major banks are adapting to the digital revolution and matching the speed and agility of fintechs, allowing further growth and development. Figuratively and literally increasing mobility of payments for some of Australia’s big banks.
Despite fintechs providing major banks with the ability to innovate faster and keep up with their consumer’s needs, these same startups can often lack the technical and business expertise they need to scale and take their product to market. They need assistance navigating the levels of bureaucracy and avoiding pitfalls. Partnering with larger institutions can not only open up a larger customer base but can also provide access to experience in risk management, a reliable reputation and create opportunities that weren’t previously available.Innovation may very well be at the heart of established companies, but technology platforms are not developed overnight and many large enterprises lack the manpower and foresight to develop the solutions internally. By combining the agility and creativity of smaller companies with the resources and experience of established companies, they are able to remain on the cutting edge of technology and are able to offer customers a level of innovation that would otherwise have been unachievable.
With so much talent in the fintech industry, partnerships are increasingly valuable. Banks like Westpac have created venture capital firms to capitalise on the potential and invest specifically in disruptive startup companies. For Westpac in particular, partnerships with startups like Coinbase, Data Republic, and Octet’s Business Enterprise, mean the company has been able to maintain its innovative capacity, combining its resources with the agility and innovation of smaller startup businesses.
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