The power of new ideas: exploring a competitive advantage for mutuals

National Sector Leader, Banking and Global Co-leader, KPMG Fintech practice
Ian Pollari, Global Co-leader, KPMG fintech practice
James Mabbott, Head of KPMG Innovate
James Mabbott, Head of KPMG Innovate

In the rush towards technology mastery, what is becoming increasingly clear is that there will inevitably be corporate winners and losers.

We’ve all seen the significant effects of digital disruption on industries, such as media, music and transportation. And many of us will be tracking the emergence of exciting new financial technology (fintech) start-ups, who are typically the ones pushing the frontiers of new products, services and business models in the financial services industry. At the very least, most of us have noticed that we’re increasingly dealing with our financial institutions using smartphone apps, or started paying at the cashier using tech like Apple Pay or Visa payWave.

Many large corporations, across all industries, are turning their vast resources and capital towards innovating – be it through acquiring new companies, creating venture capital funds to invest in start-ups, investing in dedicated teams and capability, and establishing permanent infrastructure, such in-house innovation labs. However, this can often be beyond the reach of smaller organisations, who cannot compete with this level of investment, and as a result, find it difficult pursuing these endeavours in their own right.

In Australia’s financial landscape – the mutuals sector is a perfect example of this. For decades, the mutuals led innovative initiatives within the broader financial services industry, including being the first to introduce ATMs, international transactions, retail concept stores and matrimoney accounts.  However, with the substantial investment in technology ($1 billion plus each year) being made by major institutions in the marketplace, keeping up let alone leading has generally been a challenge for the sector.

However, in an environment where start-ups are open to different pathways to market, whether that be through partnerships, white-labelling or co-creating with established organisations, they are increasingly recognising the value of working with the mutual sector.  Mutuals and fintech start-ups have a lot to offer each other. The start-ups bring the opportunity to experiment with innovative product and service ideas, as well as speed and agility. Mutuals offer access to customers, faster decision-making and infrastructure upon which start-ups can scale. Importantly, there is also often a strong values alignment between them, particularly in areas such as financial wellbeing, literacy and community focus.

For us, this is more than just an idea. We recently launched KPMG’s Mutual Fintech Accelerator Program (mLabs) – a new type of corporate accelerator to enable collaboration between leading mutual banks and credit unions together with Australian fintech start-ups exploring solutions including front, back and middle office opportunities.

We believe the power of new ideas, which are executed well and supported by the right partnerships, can deliver commercial results to any business, regardless of size. Over the coming 12-weeks we’ll be working with 7 mutuals and 14 fintech start-ups to make this a reality. We hope to create a more even playing field for mutuals when it comes to technology and help them raise their brands and profiles within the fintech sector – and ultimately demonstrate to corporates across different industries that they too can disrupt their own industry.

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