Intersekt Festival 2018

This year’s Intersekt Festival, held in Melbourne last month, was put together in quite challenging circumstances, given some of the recent events within key industry body FinTech Australia, the primary event host. It was a credit to all involved.

Not surprisingly, given some of the regulatory and industry changes underway in Australia, the key themes included: Open Banking and access to data: Trust in the banking and financial services sector (thanks to the Royal Commission, and the APRA report on the CBA); Data Privacy; Payments and the NPP; Comprehensive Credit Reporting and predatory lending practices; and Equity Crowdfunding. And of course, a little bit about Blockchain, Cryptocurrencies and Security Tokens.

There was a lot of discussion on “Trust”, especially in the age of Uber and Airbnb – how have these marketplaces managed to earn so much public and consumer trust in such a relatively short time? Yet as consumers, we obsess about Open Banking vs Data Privacy,  while banks themselves appear to be more infatuated with their Net Promoter Score…. whereas “Trust” is clearly a huge issue. In the case of the banks and the fall out from the Royal Commission, there was a discussion about whether our key financial institutions have come close to losing their social license to operate.

Meanwhile, with the prospect of self-sovereign digital identity becoming a practical reality (fuelled by blockchain, decentralisation and trust-less protocols and standards), there is a demand for cross-functional  (and cross-border) solutions for KYC/AML processing and identity management. But a lack of mutual regulatory recognition or harmonization (as opposed to “mere” industry standards) plus a diversity of business models confounds regulatory harmony, often within a single jurisdiction, let alone across multiple markets.

When it comes to payments and the NPP, it’s clear that regulation lags technology. For example, despite the existence of a (complex and somewhat uncertain) licensing regime for purchased payment facilities, APRA has only licensed one such PPF – PayPal. As former ASIC Chairman, Greg Medcraft once observed, by the time the NPP is fully operational, Blockchain will have gotten there long beforehand. And given the preponderance of stored value cards, digital wallets, peer-to-peer crypto exchanges, and multiple overseas and cross-border mobile payment apps, the respective regulatory roles of RBA, APRA, AUSTRAC, ATO and ASIC need to be clearly defined and set out.

On the topic of data protection and “big data”, there was a lot of discussion about getting the balance right between privacy and innovation. One the one hand, industry incumbents should not be allowed to use their market dominance to resist open banking and stifle the emergence of neo-banks; but on the other, there is a need to shelter the forthcoming consumer data right (CDR) from potential abuse like predatory lending (e.g., not simply define the CDR standards by reference to existing banking products and services) – mainly because the CDR is designed to empower consumers (not embolden the industry), and it is designed to be sector neutral (i.e., equally applicable to utilities, ISPs, telcos, insurance firms).

Other topics included SME lending, where new, tech-driven providers are not only originating new loans, but also refinancing existing businesses as the big 4 banks are seen to withdraw from this market; home loans (where technology is driving new loan origination, funding and distribution models); social impact (“FinTech for good”); equity crowdfunding (and the role of STOs); insurance (creating a decentralised market place) and Superannuation (which prompted perhaps the most contentious panel discussion – more on that to come!).

If there were any criticisms of the conference, based on local and overseas delegates I spoke to, they related to the length (was there enough content to sustain nearly 3 days?); the need for clearer roles and participation by the major and regional banks; the absence of investors (despite a speed-dating matching event….); and a desire to see a broader range of speakers and panelists (too many of the “usual suspects”?).

Next week: The Future of Super

 

 

 

Startup Vic’s FinTech Pitch Night

This month’s Startup VIC pitch night on FinTech was a curtain raiser for the annual Intersekt conference. Sponsored by Square and FinTech Australia, it was hosted at the Victorian Innovation Hub, and MC’d by Finch’s Shahirah Gardner and Melissa Mack, Head of Community at MoneyPlace and a Director of FinTech Australia.

As usual, the startups are mentioned here in the order they pitched:

i=Change

i=Change allows retailers and brands to “give back” to the causes their customers care about. Offering a “plug’n’play” solution for their clients, i=Change claims to have 60 brands on board already. It’s fair to say the target audience is fashion-conscience women, with an emphasis on charities, campaigns and causes that are primarily supporting the lives of women and children. Which is all good. But would it be churlish to suggest that many of the brands and products (and their associated imagery) might not be accessible to women in many of the countries where these projects operate? So, there is a potential disconnect between products and causes….

Nevertheless, as well as the feel-good factor for consumers, i=Change also claims to be reducing the retailers’ problem of abandoned online shopping carts, as the prospect of being able to donate to one of the selected causes leads to greater sales conversion and completion.

i=Change applies a fixed transaction fee on top of the customer donation, with a 30% tax rebate available to participating brands. After 5 years, i=Change is generating $8k per month in transaction fees, and is currently seeking a capital raise of $1m.

The judges were keen to understand the level of transparency under which i=Change operates, and whether in-store options are available (not just on-line retail).

For me, I can’t help thinking that this is an attempt to salve the conscience of certain parts of the fashion industry. I would also be interested to understand how much screening there is of both retailers and causes, against CSR measures or other relevant criteria.

Lucidity

Under the product brands of tradeDOX and xpertDOX, Lucidity is digitizing trade finance operations, particularly for import/export commodities transactions.

Offering a pay-per-transaction model, a subscription service, or a custom solution, Lucidity is still pre-revenue, having raised $50k in seed funding. Claiming to be streamlining and automating much of the paper document and manual processes still in use in much of the trade finance industry, it was not clear what technology they are using, nor the average transaction size they are processing. I also couldn’t help thinking that Blockchain solutions for supply chain, logistics and export/import financing will likely render Lucidity redundant.

CoinBot

CoinBot is an algo trading solution for cryptocurrencies that tokenizes individual trading strategies designed by the platform users, and fuelled by native SIT coins (Strategy Instance Tokens). The coins are used to pay for “prospecting” (i.e., scanning for unique trading signals), strategy (devising trading models) and exchange fees (to cover the cost of execution).

Currently seeking to raise $3m for 14% equity (plus SIT tokens), CoinBot supports strategy back-testing written to the Blockchain, and essentially allows users to avoid things like slippage by spreading the timing of instances over a defined trading period.

Personifi

Personifi is a data-driven marketplace for personal loans. It matches consumers with the most suitable lenders (across 30 brands on their platform).

What is supposed to make Personifi different to traditional brokers, lenders and comparison sites is the level of personalised advice, and its credit decision criteria.

With accreditation for the new open banking data regime and the new comprehensive credit reporting system. Personifi can offer improved interest rate options. It has to be noted that some of the loan providers on their platform may once have been considered “lenders of last resort” – not pay-day lenders, but certainly providers who service borrowers who have been turned down by banks and other primary lenders. So, the quality of the loan origination and the standards for lending will no doubt be critical to success.

Previously known as compeer.com.au, Personifi continues to test the broker market, and is bringing more transparency on its fees and loan T&C’s. Current revenue model is based on a 2% commission for referrals. Having pivoted from P2P lending, Personifi is targeting millennials who lack either a long or a strong credit history.

On the night, i=Change took out both the Judges’ prize, and the People’s choice.

A few observations about these pitch nights. First, I miss the audience Q&A that used to be an integral part of proceedings – if part of Startup VIC’s remit (and I am a long-standing, paid-up member) is to foster better founders, there is a missed learning opportunity for prospective and current founders if there are no questions from the audience. Second, I wish they could fix the PA problems – I had thought this had been sorted by using this new(ish), state of the art venue? Finally, it seems the pitch rules have changed, as one of tonight’s teams managed to sneak in a live product demo during their pitch – I just hope that every contestant was afforded the same opportunity, and if this is going to become a regular feature, then the organisers need to be more observant of the time limits…

Next week: Intersekt Festival 2018

 

Startup Vic’s Impact Pitch Night

Due to my personal travel commitments in recent months, it’s been a while since I attended one of Startup Vic‘s regular pitch nights – so I was pleasantly surprised to see that these monthly events continue to draw a solid crowd. As with last year’s impact investing pitch night,  this event was co-sponsored by Giant Leap VC (part of the Impact Investing Group), with support from LaunchVic, who played hosts at the Victorian Innovation Hub.

As usual, the startups pitching appear in the order they presented:

Vollie

This is an on-line platform or market place for helping charities to find skilled volunteers for project-based assignments, mostly involving digital, marketing, technical, professional and advisory services that can be delivered remotely (rather than on-site or in-field).

The founders described the benefits to corporate clients in meeting their CSR goals. These companies either “sponsor” their employees’ time and/or donate money – to be honest, it was not entirely clear how this part worked. And of course, being a two-sided market place, Vollie also charges charities on a per project basis.

According to the presenters, there are 56,000 charities in Australia, and so far the platform has generated $360,000 in “value”.

However, Vollie only assists the charities with project on-boarding, whereas the NFPs themselves are responsible for actual project delivery.

While acknowledging the appeal to Gen Y/Z volunteers, the judges were interested to know how much personalisation the platform offers, and how QA/QC issues were handled. Having served on the board of a NFP myself, I appreciate how much more complicated it is to manage volunteers – from police checks to insurance, from training to risk management.

Cyber Clinic

Claiming to provide easier access (and a better user experience) to therapeutic clinic services, Cyber Clinic enables people to find a professional therapeutic counsellor or psychologist that matches their needs. Essentially an on-line directory for mental health care (part of the growing number of telehealth providers), the service matches clients and counsellors, connects them for sessions that can be delivered remotely and at times that suit the recipient, and measures the results.

Partly developed in response to the high incidents of mental health issues presenting to GPs, delivery of counselling services is via secure video conferencing and consultation, backed up by a dedicated app. The service is designed to run on even low-bandwidth connectivity, making it accessible to regional and country users.

The guiding principles are cost, access and trust (service providers are vetted before being admitted to the platform).

The judges were interested to understand the founder’s patient acquisition strategy, which involves connecting with government agencies, healthcare providers and corporates (e.g., as part of their EAP services) – so it’s clearly designed as a B2B model, plus a direct to market, public-facing website. The judges also wondered about customer retention when measured against outcomes.

STEMSparX

With the declining levels of STEM participation in high schools, STEMSparX is designed to engage younger students by bringing STEM education direct to their doorstep.

The service combines an AI-assisted on-line learning interface with practical DIY kits. Designed around the Arduino Open Source Ecosystem, the business model is based on a B2C subscription service. The founder is a participant in Melbourne University’s MAP programme, and has been running pilot project workshops and developing an engineering curriculum.

The judges wondered how STEMSparX would compete with the likes of Code Academy, and how effective a direct-to-consumer model is, unless it was combined with a channel strategy involving communication with parents, schools and public libraries? Plus, how does a service like this compete with other distractions such as online games, video streaming and social media?

Amber Electric

This alternative electricity seller is offering retail customers access to real-time wholesale prices. By only charging customers a $10 monthly service fee, Amber claims it can pass on the true wholesale price, based on 30-minute price resets (reflecting actual market supply and demand), rather than the fixed rates and price bands that traditional electricity retailers charge.

A key aspect of Amber’s business is the availability of renewable inputs (Australia has the largest % of renewables in the national grid – excluding WA which is not part of the grid…). For example, the increase of solar-generated energy from domestic sources (household rooftop panels) that can be fed into the grid can have an impact on the average unit cost of electricity from non-solar sources, and some resulting market distortion.

The judges were keen to know if Amber applies price loading to take account of passive consumption, and whether their revenue model allows for feedback funding into additional renewables? Another question was whether Amber customers will experience considerable price spikes during the summer spikes?

Currently, Amber is only available to people living in the Sydney metropolitan area, and who do NOT have solar panels (due to the issues of feed-in tariffs?). So, very limited access at present – but clearly a disruptive model that threatens to undermine the highly regulated retail market.

It’s fair to say that Amber ticked the box for most people in the audience, as it won both the Judges’ prize, and the people’s choice.

Next week: Startup Vic’s FinTech Pitch Night

The Ongoing Productivity Debate

In my previous blog, I mentioned that productivity in Australia remains sluggish. There are various ideas as to why, and what we could do to improve performance. There are suggestions that traditional productivity analysis may track the wrong thing(s) – for example, output should not simply be measured against input hours, especially in light of technology advances such as cloud computing, AI, machine learning and AR/VR. There are even suggestions that rather than working a 5-day week (or longer), a four-day working week may actually result in better productivity outcomes – a situation we may be forced to embrace with increased automation.

Image Source: Wikimedia Commons

It’s been a number of years since I worked for a large organisation, but I get the sense that employees are still largely monitored by the number of hours they are “present” – i.e., on site, in the office, or logged in to the network. But I think we worked out some time ago that merely “turning up” is not a reliable measure of individual contribution, output or efficiency.

No doubt, the rhythm of the working day has changed – the “clock on/clock off” pattern is not what it was even when I first joined the workforce, where we still had strict core minimum hours (albeit with flexi-time and overtime).  So although many employees may feel like they are working longer hours (especially in the “always on” environment of e-mail, smart phones and remote working), I’m not sure how many of them would say they are working at optimum capacity or maximum efficiency.

For example, the amount of time employees spend on social media (the new smoko?) should not be ignored as a contributory factor in the lack of productivity gains. Yes, I know there are arguments for saying that giving employees access to Facebook et al can be beneficial in terms of research, training and development, networking, connecting with prospective customers and suppliers, and informally advocating for the companies they work for; plus, personal time spent on social media and the internet (e.g., booking a holiday) while at work may mean taking less actual time out of the office.

But let’s try to put this into perspective. With the amount of workplace technology employees have access to (plus the lowering costs of that technology), why are we still not experiencing corresponding productivity gains?

The first problem is poor deployment of that technology. How many times have you spoken to a call centre, only to be told “the system is slow today”, or worse, “the system won’t let me do that”? The second problem is poor training on the technology – if employees don’t have enough of a core understanding of the software and applications they are expected to use (I don’t even mean we all need to be coders or programmers – although they are core skills everyone will need to have in future), how will they be able to make best use of that technology? The third problem is poor alignment of technology – whether caused by legacy systems, so-called tech debt, or simply systems that do not talk to one another. I recently spent over 2 hours at my local bank trying to open a new term deposit – even though I have been a customer of the bank for more than 15 years, and have multiple products and accounts with this bank, I was told this particular product still runs on a standalone DOS platform, and the back-end is not integrated into the other customer information and account management platforms.

Finally, don’t get me started about the NBN, possibly one of the main hurdles to increased productivity for SMEs, freelancers and remote workers. In my inner-city area of Melbourne, I’ve now been told that I won’t be able to access NBN for at least another 15-18 months – much, much, much later than the original announcements. Meanwhile, since NBN launched, my neighbourhood has experienced higher density dwellings, more people working from home, more streaming and on-demand services, and more tech companies moving into the area. So legacy ADSL is being choked, and there is no improvement to existing infrastructure pending the NBN. It feels like I am in a Catch 22, and that the NBN has been over-sold, based on the feedback I read on social media and elsewhere. I’ve just come back from 2 weeks’ holiday in the South Island of New Zealand, and despite staying in some fairly remote areas, I generally enjoyed much faster internet than I get at home in Melbourne.

Next week: Startup Vic’s Impact Pitch Night