In Australia, we often labour under the misconception that industries in other countries are more advanced than ours.
But this is often not the case. Take, for example, our financial services industry. The rise of fintech in Australia has been well charted over the past few years, with rising levels of corporate, government, investor and start up activity.
A new global report, Forging the future: how financial institutions are embracing fintech to evolve and grow, surveyed 168 financial institutions in 36 countries, including Australia’s major banking, insurance and wealth management institutions.
The report found that, rather than being laggards, when it comes to fintech and banking innovation, Australia’s financial institutions are ahead of the curve: two-thirds of Australian respondents (67 percent) had a clear strategy in place, compared to just 47 percent globally.
When you analyse the range of different fintech activities of Australian financial institutions, it substantiates the research that globally, Australia in the top quartile. For example, Australia’s five largest banks have either invested in or acquired more than 50 fintech companies. The fact is that on a global scale we are up there with the leading banks.
To date, what has distinguished Australian institutions from their global counterparts is a willingness and ability to invest outside of their home market. CBA’s acquisition of TYME, Westpac’s investment in Coinbase though Reinventure, NAB’s investment in Wave and Suncorp’s investment in Trov are all good examples.
Beyond investing in start-ups at home and abroad, Australian institutions’ fintech activities also span the full section of build, buy and partner options. Westpac’s investment in Uno Home Loans, NAB’s partnership with REA and the recent announcement of Macquarie’s Open Banking platform are leading examples.
However, while it is encouraging that the Australian financial services market has been quicker than others to adapt to disruption and technology trends, we cannot afford to be complacent.
Yes, we have some early leaders in what is becoming a global race towards fintech, but there will clearly be some Australian institutions that are too slow to recognise the structural shift that is occurring in the market and they will face serious challenges in the medium-to-long term.
And, as the rest of the world wakes up to the changes taking place, the competition will only increase.
The answer lies in continued collaboration and partnering by Australian financial institutions, at home and abroad. The research shows many Australian banks and financial services participants are already actively looking to invest and collaborate with start-ups, tech giants, their peers and other institutions. This must continue.
And for Australian institutions that have not yet embraced the fintech revolution, now more than ever they need to investigate the opportunities that digital technologies and new management approaches are bringing to the financial services industry.
Australia has managed to build a slight advantage when it comes to financial services innovation, but this race is a marathon, not a sprint. If we want our financial sector to be a global leader in fintech, we can’t afford to rest on our laurels.