A big year in #FinTech

Looking back over the past year, it’s easy to see that 2015 has seen a giant leap forward for #FinTech in the Melbourne #startup scene. Much of this progress can be attributed to the efforts of the FinTech Melbourne Meetup Group, which, in little over a year, has established itself as one of the leading local startup groups, culminating in its first pitch night last month.
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Backdrop

There have been some significant business developments this year, including the launch and expansion of new P2P lending providers, payment platforms, digital currency solutions and robo-advice services. And while Melbourne does not yet have an equivalent to Sydney’s Stone & Chalk (a dedicated FinTech hub), there is enough momentum across the network of co-working spaces and the startup ecosystem of founders, advisors, incubators and accelerator programs to ensure that the city is building on its status as a financial centre.

For myself, the year in FinTech really got going with the inaugural FinTech Startup Weekend, which for me was a steep learning curve. I not only learned how to survive a hackathon, but I also gained a much deeper understanding of FinTech itself. I had become increasingly aware of the topic, via other meetup events, business networking and through reading (and writing for) specialist trade publications.* But until you actually see some of the innovative and practical ideas on new technical solutions for financial services, FinTech can seem like a lot of vaporware.

Emerging Winners

At the recent FinTech Melbourne Pitch Night, five local startups presented to a panel of distinguished judges in front of a packed audience at Melbourne Town Hall. Representing core fintech sectors (and the key messages from their pitches) were:

  • Fuzo – mobile payments platform: “2.5bn people don’t have a bank account”
  • CoinJar – a Bitcoin exchange: “targeting digital nomads”
  • StockLight – investment research: “24% of investors want help with analysis”
  • Moula – SME lending: “not a lender of last resort”
  • Timelio – cashflow finance: “factoring has missed the internet generation”

In what is traditionally a bank-dominated area of trade finance, Timelio is challenging the usual models for invoice discounting, while offering a new asset class for selected investors. I’ve featured Moula in this blog before, but this time around, I felt the presentation was quite low-key, and rather coy about the business model and the financials – maybe that’s because things are moving very quickly, and Moula is in the process of building significant traction via key commercial partnerships. The Fuzo pitch was quite complex (and probably too much technical information to present given the format), but the SIM card-based technology looks very interesting. StockLight‘s proposition is quite simple, and with access to quality content and a range of commercial models, could be one to watch as every financial institution is having to rethink wealth management and personal advice. However, on the night, CoinJar took out the first prize, and not for the first time, demonstrated how a simple concept can actually make the complex more straightforward: if nothing else, it proves that “Bitcoin can be done”.

Backlash

Some comments in the specialist trade publications have been quite scathing about FinTech, in particular those few startups that have embarked on public listings and IPOs. Much of this backlash relates to governance, disclosure and transparency; fair enough, they are important issues. But these criticisms should not be used to undermine the innovative technology, new business models and strategic partnerships that FinTech startups are bringing to the market.

Going mainstream

When otherwise conservative institutions such as industry superannuation funds start to embrace FinTech (e.g., Equip’s tie-up with Clover), or if the ASX decides to deploy blockchain technology to replace the CHESS clearing and settlement platform, it means that FinTech is definitely on the map, and can’t be written off or even ignored as some sort of irritating, disruptive upstart.

Next Steps?

In the wake of announcing the Victorian Government’s $60m LaunchVic startup initiative, the minister for small business, innovation and trade, Philip Dalidakis has been on a flurry of highly visible public speaking engagements, networking events and social media posts. Keen to get the message out there that his government intends to make Victoria a startup success, the minister is certainly generating considerable goodwill in the community.

I’m yet to understand fully the actual remit and stated goals of this new Quango. For example, what does “investing in core infrastructure” mean? Do we really need another bureaucratic body? Couldn’t the initiative have been better structured as a peak body to represent and support the private sector activities already underway?

If the minister is going to be true to his introductory remarks at the recent #hscodefest hackathon, the government needs to create the right environment for startups to flourish, not try to pick winners – leave that to the investors, entrepreneurs and industry experts. As an example, run a FinTech-themed hackathon to improve the Myki system…..

The Last Word…

Finally, for anyone needing an overview on crypto-currency and the future of money, I highly recommend Torsten Hoffmann‘s award-winning 2015 documentary, “Bitcoin: The End of Money as We Know It”, which received its Melbourne premiere last week at Collective Campus.

FOOTNOTE:

* I can’t claim any credit, but a few months after my Trade Finance blog, ICICI and Alibaba announced a new partnership – in part proving my theory that collaboration soon follows in the wake of disruption

Next week: Crate-digging in Japan

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