FF18 pitch night – Melbourne semi-final

As part of the Intersekt FinTech festival, Next Money ran the Melbourne semi-final of their 2018 Future FinTech pitch competition.

Ten startups presented, in the following order, in front of a panel of judges representing different parts of the Melbourne startup ecosystem:

BASIQ

Describing itself as “the future of finance”, and quoting the trendy mantra of “Data is the new oil”, BASIQ is an API marketplace for financial data. Designed to counter-balance “the Faustian pact” of big data, social media and search, and to compensate for the information asymmetry of bank-owned data, BASIQ espouses open banking, even though it is backed by two bank-related VC funds (NAB Ventures & Reinventure – see last week’s blog). With a focus on the needs of app developers, the commercial model is based on a licensing fee per user per transaction. Leveraging the AWS security layer (presumably to maintain privacy and data integrity), the pitch also mentioned “screen scraping” – so it wasn’t clear to me whether the data is only coming from publicly available sources? Currently, the platform only connects to financial institutions in Australia and New Zealand.

Breezedocs

A participant in the FF17 Semi-Final earlier this year, Breezedocs is a robotic document processing solution. In short, it can read/scan, sort and extract relevant data from standard documents that need to be presented by customers in support of a loan application. Operating via an API, it can work with multiple document types and multiple formats: data can be structured, semi-structured, or even unstructured. The benefits for lenders and brokers are reduced loan approval times and increased conversion, with much
better CX for the loan applicant as well. The goal is to help the standard loan origination process to go paperless, and could be extended to life insurance, income protection insurance, and immigration and visa applications.

Doshii

Doshii ensures that apps and POS solutions can connect to one another, via a common POS API platform. Apparently, there are 130 different POS providers in Australia, and many merchants use multiple services. Now backed by Reinventure, Doshii has a focus on the hospitality sector. The biggest challenge is physically connecting a POS to the API, so Doshii has developed a SDK. However, so far, only five of the 130 providers have signed up.

egenda

I hope I got this right, but egenda appears to be the new product name for the WordFlow solution for board agendas and meetings. Offering an “affordable web-based solution for every meeting”, the product is currently being trialed by a number of universities. The platform can convert PDF/word files into HTML, transforming and enriching them into a single secure website.
The panel asked how egenda compares to say, Google productivity suite or IntelligenceBank. A key aspect seems to be that egenda is platform agnostic – so it doesn’t matter the source of the document (or where it needs to be published to?). A key challenge in managing board papers is that it’s like herding cats – so a single but highly functional repository would sound attractive?

HipPocket

This US-based app is looking to launch in Australia. A phone-based financial decision app linked to a user’s bank account, it is designed to help with personalised goal-setting, budgeting and financial engagement. Asked whether it can support long-term goals, the pitch referred to data that suggests an increasing number of people are effectively living from pay-day to pay-day, and have no capacity to meet even the smallest of unexpected  bills. Having attracted a grant from the Queensland government, they are currently experimenting with different customer acquisition models, but they hope to prove that with daily engagement, it is possible to build a long-term relationship.

ID Exchange

With a tag line of “privacy protection power”, ID Exchange addresses a key issue of the “consent economy” – how to control who has access to your personal data, and how much, and for what purpose. With the whole notion of “trust” being challenged by decentralised and trustless solutions such as Blockchain applications; the plethora of data connections with the growth of IoT; and the regulatory framework around KYC, AML, CTF, data protection and privacy, there is a need for harmonised solutions. Under an “OptOut/OptIn” solution (from the website, it looks like this is a partnership with digi.me?), the idea is that users take more responsibility for managing their own data. ID Exchange offers a $20 subscription service – but unfortunately, based on the pitch, it was not clear what does this actually meant or included.

Look Who’s Charging

This is a platform for analysing credit and charge card transactions, to identify anomalies and reduce disputed charges. Currently with about 7.5% market penetration (based on merchant volumes?), it can help with fraud checks and spend analysis, by combining AI, crowd-sourcing and data science. But from the pitch, it wasn’t clear where the data is coming from. Also, a key part of the problem might be the data mismatch between card acquirers (merchant services) and card issuers (banks and financial institutions). Given that the growth in credit card fraud is coming from online shopping and CNP (card not present) purchases, it would seem that a better solution is to tighten procedures around these transactions?

Plenty

Plenty describes itself as a “financial GPS”, and is designed to address the issue of poor financial awareness. Only 20% of people see a financial planner, but now with robo-advice tools, even personalised advice can be scalable. Essentially a self-directed financial planning tool, it is free for customers to create a basic financial plan and when searching for a mortgages. For a subscription fee, customers can begin to access other products and advisors, which generates commission-based fees to Plenty.

Proviso

Another of these FinTechs to have featured in this blog before, as well as competing at FF17, Proviso makes “financial data frictionless”, in particular the loan application process. With 250,000 users per month, and 150 financial institutions signed up, their success can be ascribed to the way they standardise the data and the UX. Plus, they can access more data, from more sources, quicker. And then there are the analytics they can offer their institutional clients. In the future, there will be open banking APIs, plus insights, such as the categorisation of transaction types, affordability analysis, and decision-metrics.

Trade Ledger

This is a new platform that supports SME lending based on receivables, that also reduces the effort for SMEs seeking this form of financing. Given that cashflow issues are inextricably linked to insolvency risk, Trade Ledger has developed a unique credit assessment method, and is product-type agnostic. It also aims to offer automated solutions, with an emphasis on the digital UX of products, and use machine learning to generate a predictive probability of default (PPD). Currently the biggest challenge is in the multiple variations of bank credit and lending processes and models that need to be integrated or streamlined.

Of the ten pitches on view, I have to say that none really had a “wow” factor (although if Trade Ledger can scale their PPD model, and if ID Exchange spent a bit more time on defining their key message, both could be huge products). They were mostly worthy ideas, but still defined by current banking and finance procedures. Maybe these platforms need to do more with the transactional and customer data they generate or process, to uncover more opportunities. Or think about what they could do to disrupt adjacent markets? Anyway, on the night, Proviso proved the favourite with the judges.

Next week: Conclusions from the Intersekt Festival

 

ASIC updates – Sandbox and Crowdfunding (plus #FinTech Hub)

In recent weeks, ASIC Commissioner, John Price and his team have been making presentations to the FinTech community on two key topics: the ASIC Regulatory Sandbox, and the forthcoming Equity Crowdfunding legislation.

Image by TeeKay, sourced from Wikimedia

blogged about the sandbox when it was announced last year, and at the time, the proposed safe harbour provisions for FinTech startups were seen as being key to fostering innovation within the sector. However, at the time of the presentation I attended (June 13), there was only one confirmed participant in the sandbox scheme. According to the Commissioner, the low take-up was probably due to the timing of the regulations, being so close to summer holidays.

On the other hand, the sandbox has such a limited application, that the Government is proposing to expand its scope to include the provision of products (not just distribution), the provision of credit services, and to extend the current 12-month license waiver period to two years.

The Commissioner also mentioned the consultation process on RegTech combined with a hackathon event to be held later this year, as evidence of the direction the ASIC Innovation Hub is taking. Let’s just hope they can keep up with how fast the FinTech community (especially in blockchain and crypto-currency) is evolving, since regulation usually lags innovation.

At a separate series of FinTech and startup briefings, Mr Price discussed the new equity crowdfunding provisions, due to take effect on September 29. Currently undertaking a consultation process on the detailed regulations, the legislation applies only to ordinary shares issued by companies with a maximum of $25m in assets and annual turnover, and which become public companies once the legislation comes into force.

Eligible crowd-sourced funding companies (CSF’s) can raise a maximum of $5m per annum, and investors can invest a maximum of $10,000 per company each year. CSF’s cannot invest in other businesses or securities, and cannot have simultaneous multiple offers on participating crowdfunding platforms.

The Commissioner spoke about the temporary reporting and corporate governance concessions under the scheme: eligible public companies don’t need to have Annual Public Meetings or audited accounts for a period of 5 years; and the offer documents do not have to be as detailed as a full IPO prospectus. Whether these concessions will be enough to attract issuers, or whether the limitations prove more of a deterrent, it will be interesting to see if the new legislation meets the expectations of government, ASIC, issuers and investors.

Meanwhile, things are getting interesting for anyone following the FinTech hub story, and the perennial Melbourne-Sydney startup rivalry:

First, the Victorian government has issued an RFP for a Melbourne FinTech Hub (submissions close tomorrow…). The state government has also announced its partnership with Fintech Australia and others to host the intersekt festival, following last year’s Collab / Collide event.

Second, Melbourne’s York Butter Factory has recently announced plans to expand into Sydney. While not purely a FinTech hub, this new venture will feature the Commonwealth Bank as an anchor tenant. With former ANZ CEO Mike Smith as its Chair, YBF might also be expected to make a submission to the Victorian RFP.

Third, Sydney’s Stone & Chalk has just announced it will be opening a new FinTech hub in Melbourne. Given that a number of key Melbourne-based financial institutions (such as ANZ, NAB, AustralianSuper, Findex, Genworth and Liberty Financial) are backing this new venture, could it suggest they can’t wait for the Victorian RFP process to finish?

Next week: StartupVic’s Machine Learning / AI pitch night

 

 

ANZ’s new CEO on #FinTech, CX and #digital disruption – 10 Key Takeaways

I went to the recent Q&A with the new CEO of ANZ, Shayne Elliott, organised by FinTech Melbourne. It was the first public speaking appearance by Shayne since becoming CEO (excluding his gig at the Australian Tennis Open), and followed a similar event last year with Patrick Maes, the bank’s CTO.

600_446693337The key themes were:

  1. Improving the customer experience (CX) is paramount
  2. Maintaining the high level of trust customers place in their banks is key
  3. Being aware of FinTech disruption is important, but remaining focused on core strategy is even more important
  4. FinTech can coexist with traditional banks, but the latter will win out in the end
  5. The bigger opportunity for FinTech is probably in SME solutions, rather than B2C
  6. Increased process automation is in support of CX, not about reducing headcount
  7. Big data and customer analytics are all very well, but have to drive CX outcomes
  8. Customers still see the relationship with their main financial institution in terms of basic transaction accounts, which is why payment solutions (a high volume/low margin activity) are vital to the banks’ sustainability
  9. ANZ is about to appoint a head of digital banking who will report direct to the CEO
  10. ANZ has been rated as one of the top global banks in terms of its use of Twitter and social media (but from what I have seen, much of the Big 4 banks’ social media presence can be attributed to their sports sponsorship…)

There was also some discussion around ANZ’s Asian strategy, and the statement last year that the “new” strategy is about becoming a digital bank. Shayne was quick to point out that they are not abandoning the Asian strategy (it’s not either/or) but because they embarked on Asia 8 years ago, most of the work has been done. Now they need to consolidate and expand the platform they have built. He also placed ANZ’s Australian business as being a comparatively small part of the group’s portfolio, and also took the view that despite ANZ’s size, resources and reach, digital products have to be developed market by market – it’s not a one size fits all approach. (Several FinTech founders in the audience took a very different perspective on this.)

And, in a bid to appear entirely approachable, both Shayne and Patrick were happy for people to contact them direct by e-mail… So if any budding FinTech founders have an idea to pitch to a major bank, you know who to contact.

Next week: Making the most of the moment…

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