When Will Australia’s Digital Banking Revolution Begin?
Opinion piece by Dexter Cousins
June witnessed the launch of another NeoBank in Australia with the Cuscal backed 86400. The venture has some serious weight behind it with Anthony Thomson, founder of Atom Bank in the UK, as Chair for the bank.
86400 is still to receive a full banking license and hopes to launch it’s first products early next year. The executive team is in place, in execution mode and there is significant hiring behind the scenes.
Xinja meanwhile recently held their first AGM and announced series C capital raise valuing the business at AUS $95m. With regulators yet to grant Xinja a restricted banking license the raise is conditional on securing a license.
We are hearing that Neo Banks are turning capital away, significant amounts. Australian consumers and investors are raring to go.
Volt Bank, the only licensed Neo Bank in Australia is quietly going about their business. There is significant hiring on the development side but as yet, the mobile app has not been released. Volt Bank Deputy CEO Luke Bunbury was speaking at Mumbrella this week talking about distrust of banks. And he is 100% on the money.
Everybody wants Neo Banks
Recruiters are having a hard time right now trying to convince top talent to join the big 4 banks. And top talent of the big 4 banks and financial institutions seem eager to move on. My calendar in August is fully booked with people from large financial institutions wanting to discuss a move to Fintech. The career transition from large corporate to startup is difficult with many people failing to make the leap.
Despite the high risk involved and the fact that even the licensed Neobanks in Australia are yet to offer a single product, top talent are showing a strong desire to switch.
Peers in the UK are witnessing a similar trend. Contacts at the Global Search firms in London tell me it is a real struggle to fill the top banking jobs. Executives would prefer to join a Fintech where the regulatory sandbox is making life easier, the rewards greater and the opportunity to build and drive change in the industry fulfilling.
What is holding Australia back?
Asian Investment in Fintech has increased significantly in the past 12 months and the UK is 5 years ahead of where Australia is now. Despite the efforts of Xinja, Volt, 86400, Qwid and Douugh, Australians have the choice of one product, a prepaid card. In contrast, ANT Financial in China has a 30 day Go To Market turnaround for new products. It raised US $14bn earlier this year.
Who is to blame for the lack of progress?
The Royal Commission appears to be making life for new entrants super tough and the stance of regulators is clearly stunting innovation and progress. While third world countries advance at a rapid rate, it appears the only ship not rising with the tide is Australia.
MP Ed Husic appears to be highlighting the lack of progress. Treasurer, Hon Scott Morrison MP gave an impressive and encouraging speech at the Annual Fintech Awards dinner in Sydney this week. He made it explicitly clear the Open Banking programme is a priority with the Government relying on the Fintech industry “not to stuff it up”. If successful, Open Banking will be used as the template for all future Australian innovation. Scott Morrison has put a flag in the sand with Australia’s Open Banking initiative set to go live 1st July 2019. He seems personally and politically invested in Open Banking, he can’t afford for it to be his NBN!
But July 2019 is only 11 months away!
How much time and energy are we seeing wasted at innovation hubs, conferences and meetups? Are we guilty of confusing motion with progress?
The regulatory sandbox seems to be filled with quicksand. How many Fintech startups are spending time, energy and precious resources pandering to regulators? Waiting months for a response, only to be asked to fill out more forms, answer more questions, when a 30 minute meeting could quickly resolve any minor queries halting progress.
Quietly, small businesses and start up founders are being driven to despair (and often out of business) while corporate, government and regulators appear more interested in perception than progress.
I am convinced Australia has the talent, ideas, capital and capability to be the leading Fintech innovation hub.
So what are the regulators waiting for? Would more progress be made if the spotlight was put on ASIC and APRA?
2018 sees significant increase in Fintech investment.
Another excellent report by KPMG has just been released, providing some interesting insights on global Fintech investment.
US – In H1’18, US fintech companies received $14.2 billion in investment, including over $5 billion in venture capital investment
EUROPE – In H1’18 investment in fintech companies in Europe hit $26 billion across 198 deals
ASIA – In H1’18 investment in fintech companies in Asia hit $16.8 billion across 162 deals
Blockchain hub launches at Tank Stream Labs.
Our good friends at Tank Stream Labs have launched Australia’s first Blockchain hub. This is a positive move for Blockchain in Australia. Tank Stream CEO, Bradley Delamare is a top guy and highly respected by the Fintech and startup community. The hub is in great hands and we should see exciting things in the next 12 months.
Everyone has their views on Blockchain, Distributed Ledger Technology and Crypto Currency.
Tier One People have turned away a number of ICO’s and Blockchain projects as potential clients in the last few months. Almost all approaches have asked for assistance in hiring a Chief Technology Officer or ‘Blockchain Specialists’ – We are not really sure what a Blockchain Specialist is, where you find one or how you even assess if they are indeed a Blockchain Specialist.
90% of projects fail and I can see why. Too many dreamers and schemers looking to make a fast buck. When the worlds of recruitment and blockchain collide, you hear of some disgraceful things going on.
Tier One People firmly believe that blockchain or some form of DLT is the future. If we believe in a project and we believe in the people and it has a solid use case then we have even accepted payment for recruitment services in tokens.
Product Owners – The Unicorn hire?
We are seeing a huge demand for product managers, the brief from each client will vary. However every client demands a mini CEO as Product Owner.
Combining sales, digital marketing, pricing, relationship management, project management and tech skills in one person is tough. Do these people even exist?
We have all been given the advice to specialise in our career. Clients tell me they want a specialist, yet they end up hiring generalists, people who can operate across the full spectrum of a business.
Is there a shortage of Talent in Fintech?
Education system and recruitment process has been built on the centuries old command and control models, think the Church or Military. The result of this continued and archaic methodology is a workforce not equipped for today’s world. What we have is a highly technical, task oriented workforce the majority of which are competent.
With a global population of 7.6 bn people, there is no talent shortage. The workforce is struggling to keep up pace with continuous change and demands placed on them. Their education, training and careers to date have not equipped them with the experiences to be highly effective in high growth businesses – yet!
So what is the solution? Focus your recruitment process and hiring criteria on potential and capacity to learn/adapt. If your hiring process is focused on competency and behaviour based interviewing, you will likely hire competent people and they will likely fail.
If your interview process is focused on performance/results, through a series of tests, situational interviews, relevant business case presentations and psychometric profiling you will likely identify the high performers.
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