Category Archives: Financial Services

Summing up the #FinTech summit

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Coinciding with the launch of the inaugural EY FinTech Australia Census 2016*, FinTech Australia’s first industry summit Collab/Collide was a major beneficiary of the initial round of funding from the Victorian government’s LaunchVic program. The summit provided a useful opportunity to survey the global landscape, to compare notes and of course, to network. But did we learn anything new?

6278fd_bc2f12c8b40744a281f9afbb37ba1a3emv2The summit was programmed around key FinTech themes of payment services, alternative funding, robo-advice, Blockchain, data and regulation. Participation by some key industry figures from Asia, Europe and the USA (both founders and investors) also provided some international perspective.

While Australia appears to be maintaining a top 5 position in the global FinTech rankings, our focus on things like P2P lending, payments and robo-advice risks losing sight of bigger opportunities in Blockchain assets, enterprise solutions and institutional services.

And although it was good to see a team from the Treasury Corporation of Victoria in the audience, as well some of their colleagues from DEDJTR, it was surprising that there was hardly any representation from among institutional investors (superannuation funds, asset managers, insurance industry), major financial institutions, or the traditional financial markets (exchanges, intermediaries, brokers, vendors)**.

Some of the best sessions were the comparative panels on Blockchain, regulation and funding. In particular, there was an interesting discussion on whether Australia should be worried or concerned about UK opportunities post-Brexit, or focus more on Asian markets. But with the development of reciprocal financial licensing arrangements between Australia and the UK, and Australia and Singapore (and between the UK and Singapore), ASIC is clearly trying to engage with both markets.

The Federal Treasurer, Scott Morrison also took time out of his busy schedule to address the audience on the topic of Open Banking Standards, following on from the Productivity Commission’s Draft Report on Data Availability and Use. The overall goal is to have a system of FinTech data and operating standards that is “regulatory match fit”, that delivers frictionless inter-party transactions and enhanced industry participation and collaboration. For example: once the New Payment Platform launches in 2017, we should have more open access to transaction data; the ATO is implementing a “single-touch” payroll process; and ASIC is due to publish recommendations for the financial services Regulatory Sandbox by the end of 2016.

Unfortunately, given the changes in venue and content, the program struggled to stretch to a second full day, as audience numbers dwindled. Something for the organisers to think about next time? I would also advocate organising specific sessions, e.g., for B2B and B2C, or for vendors and institutions.

Finally, speaking to a member of the DEDJTR team, there is a clear desire on the part of the State government that the FinTech community will come together along with other market participants to figure out how to scale this emerging sector. In other words, how to turn the growing number of FinTech startups (often with directly competing products and services), hubs, incubators, accelerators and VC funds into a sustainable industry?

* For a handy summary of the EY survey, check out Lucinda de Jong’s blog for Timelio

** In the interests of full disclosure, a FinTech startup I work with, Brave New Coin (a market data vendor for Blockchain assets) was a Strategic Partner for the Summit

Next week: The Startup of Me v2.0

StartupVic’s #Pitch Night for October

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The crowds are getting bigger, the list of sponsors is getting longer, there’s a new logo, and they’ve even managed to (sort of) fix the PA system. The Startup Victoria monthly pitch night is now a firm fixture on Melbourne’s Meetup calendar…

Image sourced from Startup Vic's Meetup page (Photo by Daniel)

Image sourced from Startup Vic’s Meetup page (Photo by Daniel)

As usual, there were 4 startup pitches, and I’ll comment on each in order of their presentations:

Next Address

This Ballarat-based startup has built a P2P website that offers “direct to market” property sales, removing the need for traditional estate agents. Recognising that the real estate sector is still ripe for some digital disruption, Next Address is challenging the commission-based fees and cost++ price markup on services that many estate agents charge their clients.

They have established an affiliate programme, and generated some positive media coverage, but have yet to complete any sales. Charging a fee of around $549 to vendors (there is a sliding scale), compared to similar competitors priced at between $800 and $2,000, Next Address is also offering a Facebook package.

I think it’s fair to say that this pitch did not come across as one of the strongest or most compelling presentations at these pitch nights (possibly due to some stage nerves?). There were also questions among people I spoke to about market traction, the customer acquisition model and the conversion process.

Given that there is a lot of competition within real estate listings and aggregation (often backed by major media companies), and given that many vendors still prefer to use the auction process, it was difficult to see how Next Address can cut through, unless they focus on a point of differentiation: geographic market, property type, price range, marketing support or add-on services.

However, the founders must be doing something right, as on the night they managed to attract the attention of a senior executive from a well-known real estate listings website.

DragonBill

DragonBill is an invoicing and remittance solution aimed at sole traders and micro businesses, which has featured in this blog before. The focus is on helping clients manage their cashflow and providing them with a level of financial literacy and education.

Since launching, DragonBill has found a substantial niche market among sporting clubs and associations, in large part because 50% of club members are also SME owners. They are continuing to build partnerships with accountants and are now starting to market themselves via co-working spaces.

Further ahead, there are plans to build some sort of superannuation offering, given that many SME owners and sole traders may not be making sufficient contributions to their personal funds. There are also regulatory changes in payroll administration following the roll out of SuperStream by the ATO.

The judges were interested to know what plans DragonBill has for international growth, and whether the platform can output financial and tax reporting for accounting purposes – both of which are under consideration. Meanwhile, DragonBill was recently shortlisted for an award by VISA.

Spee3d

In short, this business supports “3-D printing of metals at production speeds“. Using a proprietary “Lightspee3d” technology, the goal is to offer a low-cost, high-speed solution for full-scale production output, not just prototypes and medical devices. Primarily manufacturing in copper and aluminium 6061, current output is 100g/minute ( expecting to soon reach 250g/minute), and the maximum size is 300mm x 300mm x 300mm.

For the technically minded, the additive process is described as something like “bugs hitting a windshield”. It does not use any gasses, and deploys a “line of sight” process, meaning that some hollow objects are possible. The business has picked up a Bosch Venture Award.

Targeting products traditionally fabricated by sand casting, Spee3d is working with clients who have a preference for low-cost powders, initially within the university market, then the auto industry. They are also aiming at new products, and not parts manufactured from existing casts that have associated sunk costs. There was quite a lot of excitement around this pitch, judging by the number of questions it prompted.

Foddies

This startup is launching a fructose friendly food business, offering products, recipes and outlets (shops, cafes, catering) that can also appeal to people with other food allergies and dietary requirements. If, like me, you were unaware of the “Low FODMAP” diet,
it was researched and created in Melbourne (Monash Uni), and from my initial reading, it has some similarities with diets designed for people needing gluten-free, lactose free and low GI solutions.

Admittedly not the first to market, Foddies claims to be the first to develop a holistic solution, which includes a wholesale strategy for ready-made meals, a cafe franchise and an online store. Next, they plan to work with airlines and hospitals. Although building on their social media engagement, the biggest challenge, when asked by the judges, was the lack of public awareness or education on the Low FODMAP model.

From a personal perspective, I appreciate the importance of helping people with food allergies or intolerance to manage their condition through appropriate diet. But I can’t be alone in thinking that the higher reported incidence of these complaints may be due to multiple factors such as the increased use of chemicals in the environment (especially food production), the lower resistance in our immune systems caused by too many antibiotics, and our over-reliance on certain strains and varieties of crops. More research is called for.

So, after a very mixed bag of startup pitches, the winner was Spee3d, based on the audience and panel voting.

Next week: Richmond 3121

A Tale of Two #FinTech Cities – Part 2

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It feels like the inter-city #FinTech and startup rivalry between Melbourne and Sydney is starting to get personal. The blow-up between Victorian Small Business Minister, Philip Dalidakis and Freelancer CEO, Matt Barrie over StartCon is perhaps the most strident example, but other discontent is bubbling underneath the service.

screen-shot-2016-10-05-at-10-51-49-amLet’s take a look at what’s actually been happening around #FinTech in Melbourne, and try to understand what might be the cause of this apparent disquiet:

First, the recently announced LaunchVic grants have been met with a mix of gratitude, bewilderment and some sour grapes, based on the people I have talked to in the start-up community. There was a sense of “jobs for the boys”, “usual suspects”, “who?”, and “yeah, good on ya”. Nothing new there, then, when public money is being handed out. High-profile beneficiaries of the initial A$6.5m of grants include FinTech Australia (as part of a major FinTech Conference to be held in Melbourne), FinTech Melbourne (which is now the largest group of its kind outside the US and UK), inspire9, Startup Victoria and Collective Campus.

Second, Stripe‘s CEO, John Collison was in town to celebrate their 2nd birthday in Melbourne. (This is the 3rd time in 2 years Collison has been in Australia – he must love what we are doing here? Or maybe it’s the Victorian government incentives that attracted Stripe to set up in Melbourne: see below.) This time around, there were some major announcements among the celebrations, including:

  • 25% of Australians have paid for something online using Stripe
  • Stripe is launching “Connect” in Australia – making it easier for local businesses to roll out payment solutions in multiple markets overseas
  • Stripe continues to keep its APIs as simple and streamlined as possible – they even support Amazon’s Alexa voice recognition system

There was also a panel discussion with some of Stripe’s local clients, and a Q&A with Collison himself:

  • Andre Eikmeier from Vinomofo commented that payment solutions (like all technology) should be invisible, and just work in the background
  • Ben Styles from Xero explained that integration with Xero’s own APIs is critical, and that they have co-developed some products
  • Nicole Brolan from SEEK said that thanks to Stripe, her business is finally allowing clients to pay invoices on-line

Asked about innovation, Collison argued that mobile phone technology was the spur for services like Uber. However, he’s not especially engaged with Blockchain, as he does not see the use case. He thinks the next major innovation will be in medtech (telemetrics & wearables), and machine learning (speech and image recognition). As he said, “driverless cars are not just about the sensors but what the data is telling you. We know more about the health of your car than your own body.” He also had some words of advice to aspiring local entrepreneurs and startup founders:

  • Having a global or international perspective is determined by your markets, your competition, and access to specific talent pools.
  • It’s probably wrong to aspire to be like Atlassian – you need to understand WHY Atlassian has been successful, not WHAT it did or HOW it did it – which means getting back to core values and core purpose.

Third, as the Stripe celebrations started to kick off, across town FinTech Melbourne hosted an event starring Alex Scandurra, from Sydney’s Stone & Chalk FinTech hub. This was billed as a “pre-launch” for Stone & Chalk’s planned foray into Melbourne, and was part information session, part FinTech love fest, and part fan-boy hangout. Scandurra’s presentation was quick to point out that the “plan is not to bring Stone & Chalk to Melbourne, but to create Melbourne’s own Stone & Chalk”. (Spot the subtle difference?)

To its credit, Stone & Chalk is home to 300 people and 75 startups, has helped start 21 companies and create 150 jobs, and participants have collectively raised $100m in funding, although Stone & Chalk does not take equity. Scandurra also commented that FinTech is not an industry in itself – it is a horizontal that serves all industries.

There seems to be a lot of local clamouring for a FinTech hub in Melbourne. However, unlike the NSW government which has directly partnered with Stone & Chalk, I understand that the Victorian government is not prepared or able to “invest” in such a project – and certainly not before there is some private sector funding on the table.

Meanwhile, the founder of a rival payment system expressed his frustration that the Victorian government “sponsored” Stripe to come to Australia, but won’t offer similar support to local startups. Another FinTech CEO I spoke to was irked that Stone & Chalk would appear to be breaching its own mandate if it set up shop outside NSW.

In fact, could be argued that Stone & Chalk was established in Sydney to directly compete with Melbourne’s startup ecosystem. In large part, this is thanks to the huge success that the Victorian government continues to have in luring major tech companies and global startups to come to Melbourne. Names such as Zendesk, Eventbrite, Slack, Square, Stripe and now Cognizant.

If the debate over Stone & Chalk coming to Melbourne is about creating a local FinTech hub (whether or not the Victorian government tips in some money), we have to examine the need for such a hub. For example, is it simply a question of real estate, so that all the FinTech startups can be co-located in one place? If so, I would have thought that was easy to resolve: there’s a lot of empty office space, and Melbourne rents are cheaper than Sydney; also, a growing number of office landlords recognise the mutual benefits and knock-on effects of hosting co-working venues in their buildings.

We also have to consider if Melbourne’s existing FinTech startup eco-system/infrastructure is willing to come together to underpin such a hub. If so, what is the hub going to do? What is its purpose? What is the missing piece that the hub is designed to fill? And who/what/where is best placed to fill that need/gap?

Looking back, Melbourne has been the home of a number of FinTech businesses, that are now global public enterprises – IRESS, Computershare, Touchcorp, Novatti, for example – so there is obviously something in the local water (or coffee). For me, however, a key barrier for FinTech specifically, and startups more generally, is the inability to connect to institutional funds and investors (Clover being a notable exception?). Other obstacles include the stodgy procurement processes used by the public sector and many large corporations, which make it more difficult for startups to compete for work, and the reluctance by enterprise clients to try a local product or service unless it has been tested and proven elsewhere.

Finally, on a more positive note, it was very interesting to see that founders from Atlassian and Vinomofo are backing Spaceship, a new superannuation fund appealing to a younger, tech-savvy audience.

Next week: Bridging the Digital Divide

Customer service revisited: Navigating The Last Mile

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From time to time, I like to comment on the current state of customer service, because this is still one of the key areas where companies can differentiate themselves. So, based on recent experiences with a bank, an insurer, a telco and an e-commerce site, I’m sharing my thoughts on the Last Mile – where even great products and great companies can fall down due to their inability to truly understand the customer experience they create.

Image sourced from LinkedIn

Image sourced from LinkedIn

1. The Bank

After waiting over 30 minutes in a call-centre queue, I eventually spoke to someone who said she could help me with a query regarding the disparity in the amount and rate of interest earned on one of my savings accounts. But first, I was given a choice: either accept an instant $50 “goodwill” payment now, or wait for the outcome of her investigation. Because the amount I was querying was several times that offer, I requested she look into the matter further.

Leaving aside the fact that she failed to get back to me within her stated timeframe (I only managed to re-engage the bank when I queried the lack of response via their social media account…), it transpires that she gave me incorrect product information. This underscores one of my main complaints about customer service – inadequate product and process training. Her supervisor who picked up the query then offered me a $10 “goodwill” payment for my trouble (overlooking I had already been offered $50!).

It was only when I insisted that the amount I was potentially out-of-pocket was closer to $300, and following a protracted and somewhat terse negotiation did the supervisor choose to exercise her (undefined) discretion and settle for an amount in between $50 and $300. While the outcome was closer to what I had expected, the customer service process and experience were far from satisfactory.

2. The Insurer

My home and contents policy recently came up for renewal. I noticed that, even with a customer loyalty discount, the premium increase was far higher than current CPI. It seemed to me that a previous “special discount” I had been offered when I last updated my policy at a bricks and mortar branch, rather than by phone or online, was now being clawed back (and then some) with the latest premium increase.

So, I shopped around online and found a better deal. When I rang the original insurer to advise them I was cancelling and taking my business elsewhere, they said: “Is there anything we can do to keep your business?”. My response was, “Too late.”

I accept that premiums may have to increase. But rather than simply sending out a renewal notice asking for more money, I think the better strategy would be to provide an explanation for the increase, and demonstrate the additional value I would be getting for renewing my policy. I resent being taken for granted, because the insurer clearly assumed I would simply pay the increase on demand, and only attempted to offer a better deal when I rang up to cancel.

3. The Telco

Late last year, I switched telcos, because the service was increasingly reliable, and I had experienced poor customer service from the start of my contract. In the process of transferring my mobile, fixed line and internet accounts, I notified the telco that I was dissatisfied with their service, and was taking my business elsewhere. I also initiated the return of my telco-supplied modem, to avoid incurring any additional fees or expenses. 

However, the telco continued charging me for certain services, long after I had discontinued using them, and 2-3 months after they had been ported over to my new service provider.* I requested the refund of the overpayments. The telco refused, because they claimed they had not actually been formally notified that I wished to cancel the services. So I lodged a complaint via the TIO, but the telco still denied any liability, and refused to refund my money.

Eventually, a TIO Investigation Officer was assigned to my case, and he agreed that on any reasonable reading of my complaint, the telco should have concluded that I was cancelling the service. The telco continued to resist my request for a refund:

E-mail received May 31: “[We have] reviewed the complaint and have decided that we will not be changing our position on the matter.”

I believe that the Case Officer then suggested that the telco listen again to the calls I had made, and place them in the context of the other contemporaneous events and the full history of my contract. He also advised the telco that he was prepared to initiate a full and formal investigation of the complaint.

Only then (and in a remarkably speedy U-turn, worthy of a politician) did the telco respond:

E-mail received June 7: “Thank you for your time and patience throughout this case, it is really appreciated (sic). We apologise for the poor level of service you’ve received that led you to escalate to this point. This is not the kind of service we want our customers to experience and it’s very unfortunate that you have to go through this, especially after you cancelled as a result of the poor service.
 
We will be crediting the account with $XX for the period from the XXth December 2015 to the XXth February 2016 when the service was active after it should have been terminated.”

I’m clearly grateful to the TIO for their assistance, but frankly, it shouldn’t have to get to that point. For an organisation that prides itself on superior customer service, the telco in question clearly does not understand customer experience.

4. E-commerce

There are several reasons why I prefer to order online, rather than buy from local shops: convenience, choice, availability, service and often price as well. Speed of delivery is usually not a factor, especially when ordering from overseas (although in many cases, ordering from overseas can be quicker than buying from a local online store).

However, I’ve recently experienced some delays in overseas deliveries, and upon investigating the matter, discovered that, quite apart from a lack of knowledge on the part of some customer service reps (that old chestnut), the multiple links in the supply chain can result in mis-communication and mis-alignment of their respective operating systems.

For example, if the online retailer does not actually fulfill the order, or if they or their nominated carrier outsources customs clearance and/or the final delivery, there may be as many as 6 or 7 hand-off stages in the process. Unless all the back-end platforms talk to each other (and in the same language), the risk of stuff falling between the cracks is very high.  (The notion of same-day delivery by drone is probably some way off…)

What is particularly frustrating is when one part of the vendor’s website has the (overdue) ETA as one date, but another part of the same website shows a much later ETA – even within a single platform! Perhaps if retailers got their upstream systems in order, the Last Mile would be more likely to take care of itself?

*Footnote: My original provider is merely a re-seller, and therefore is subject to wholesale access provisions. According to some information I received from my new provider, it is illegal for a telco to charge for services over which they no longer have any control or access.

Next week: Field report from Melbourne #Startup Week