In early 2016 the federal government announced the formation of a new FinTech Advisory Group to advise the Federal Treasurer on significant issues pertaining to Australia’s FinTech industry. Examples of these issues include identifying areas of potential future reform and ensuring the specific priorities of the industry are considered in the implementation of government policies.
WealthBricks sat down with Asher Tan, a FinTech Advisory Group member and CEO of Coinjar, a global personal finance company, to discuss his views on Australia’s FinTech industry.
Q: What do you consider to be the top three priorities of the FinTech Industry?
- FinTech needs to focus on the consumer: providing better, more valuable services. Even in a non-retail context, technological efficiencies should be ultimately passed on to the end-user. This focus extends to managing risk as much as possible. FinTech falls short of its ambitions if the tradeoff of risk exceeds the value provided to users.
- Collaboration is necessary. The financial ecosystem is a highly connected one and integrations are necessary to succeed. From accessing data in banks (API’s, data aggregation), to payments and transfers — it is impossible to escape collaboration in finance. Startups and incumbents should be open to working together as much as possible, taking the opposite approach will yield limited results.
- Have patience. Disruption has a reputation for changing industries quickly, but assuming change will come overnight will lead to unrealistic expectations. There will be struggles, and even failures in the FinTech industry. Success is not guaranteed in all verticals. Parties need to understand that change is necessary but it will take time and commitment to realise a better financial future.
Q: What do you see are the main economic opportunities for Australia in having a growing FinTech sector?
A more efficient financial sector will lead to productivity gains as resources are more efficiently allocated. These productivity gains will not just be evident in the financial sector but will extend to all sectors of the economy. Similarly more competition will lead to better customer outcomes.
Q: What competitive advantage does Australia have to allow it to become a world leader in FinTech?
Australia has a high-rate of financial inclusion and technology adoption. Basic financial services are already in place for the vast majority of Australians. In addition, use of new technology such as smartphones penetration is among the highest in the world. This has led to relatively quicker adoption of financial technologies such as contactless payments. The market is thus ripe as a proving ground for solutions.
Q: What do you see as the main obstacles in FinTech start-ups flourishing in Australia?
While it is a highly developed market, Australia is relatively small and isolated compared to larger countries USA, China and blocs such as Eurozone or ASEAN. This means advantages of scale will often times be in favour of companies operating in larger markets. This scale can also limit the size of investment and market power of emerging FinTech companies. A by-product of this is the oligopoly of financial services in Australia resulting in a limited choice of options for consumers.
Q: What interests you personally about FinTech?
Finance and technology are proving to be ubiquitous. This creates immense opportunities and but also challenges. How can the most number of people benefit from advances in technology? Is my experience better or worse with these new FinTech applications? Can we overcome the existing status quo to create fairer financial markets? These questions should excite all of us at some level, consumers and businesses.
The government expects fintech to have an important role to play in Australia’s innovation future – it will be interesting to monitor the developments.