By Dan Steiner,
Senior Writer
From banking to payments to insurance to accounting to investing, local Fintech platforms play an active role in most Aussies’ lives. It’s no surprise, really, seeing as we’re spoilt for choice: as of October 2019, KPMG counted 629 active Fintechs nationally, up eight per cent on the 2018 figure.
Since 2017, neobanks have been flying the flag for consumer-focused, no fuss, personality-rich financial services. The latest disruptor, Douugh, listed on the ASX last month and joins the 50-odd banking options Aussies now have available to them.
Competition and innovation are bedfellows, so we expect the mobile banking space to stay lively. Our eyes are on the Big Four in particular, who are not only keen to capture a younger market but also move the focus away from recent reputational damage.
Douugh founder and CEO Andy Taylor describes his app as an AI-powered “financial wellness platform”. It’s a pithy summary of how Fintechs in general have separated themselves from traditional players: this isn’t a service or an institution — it’s a lifestyle.
Pay to play
Fintechs have never been as relevant or prevalent in our lives. This year they’ve been pivotal in satisfying the consumer need for control and convenience in uncertain times.
The noun and verb that best exemplifies this is Afterpay, a brand beloved by merchants and Millennials alike. Despite competition from Zip Co and CBA-backed Klarna, it remains the BNPL big dog (it even has its own custom Pantone now, Bondi Mint, following an August rebrand).
It boasts some 10m active users worldwide and received an enormous boost from the pandemic, fuelled by an e-commerce explosion and Australia’s growing aversion to credit, with the number of cards in operation back to 2009 levels. Add to that the lack of local BNPL regulation and it’s been a perfect storm, with the stock value soaring from $8.90 on March 23 to $83.48 on October 6. According to Forbes, Afterpay’s two Aussie co-founders are now billionaires.
This year, Fintechs have been pivotal in satisfying the consumer need for control and convenience in uncertain times.
Again, the thing to watch here is how traditional players attempt to disrupt the disruptors. Westpac has actually partnered with Afterpay, and will make its banking-as-a-service (BaaS) platform available to customers seeking savings and transaction accounts — allowing the brand to move beyond payments.
Meanwhile, CBA and NAB have launched no interest credit cards, while Visa and Mastercard both have BNPL services in-market. Given Afterpay spent $32m on marketing in the second half of 2019 alone, it’s fair to say it’s poised for battle.
On the topic of Aussie Fintech unicorns that saw gains during Covid, there’s also Melbourne’s Airwallex, our other payments platform success story. As more businesses undergo digital transformations and the global economy follows suit, that bodes very well for the brand, which enables real-time, cross-border payments, making international transactions easier and faster.
In September, co-founder Lucy Liu told SmartCompany, “Fintech is almost like the new cloud. It’s everywhere.” While it’s not everywhere just yet, Airwallex is moving at pace. From Q2 to Q3, it saw a 100 per cent increase in net revenue and a 50 per cent increase in customers. Its total cap raise is $564m, over 200 hires are on the cards this year, and there are plans to move into the US in early 2021.
Feeling Bullish
Something else the pandemic prompted was the adoption of new hobbies. For some, it was sourdough; for others, it was playing the stock market.
The combination of lockdown boredom and risk-reward thrills has seen a spike in the usage of zero-fee trading apps like US player Robinhood, which was valued at $15.6bn in August (on the downside, the gamified nature of its interface has come under criticism).
The rapidly growing, Sydney-based Superhero is backed by the founders of Afterpay and Zip Co, and aims to “make investing accessible to the younger generation”. NZ’s most-popular investment platform, Sharesies, is a subscription service with 200,000 users — 75,000 added during Covid — and likewise focuses on user-friendly investing for a younger audience (they even offer accounts for kids).
As with banking and payments, the story here is control and convenience, though the stakes are arguably higher.
Brands are currently seeking to democratise finance.
Whether these platforms can continue to woo — and, ideally, educate and empower — Millennials and Gen Zs with time and money on their hands will be interesting to observe. More interesting still is whether they can make the shift from hot hobby to legitimate lifestyle brand (the Afterpay of investing, so to speak).
What we’ve noticed in 2020, besides the fact certain Fintechs are not only immune to pandemics but thrive in them, is that brands are seeking to democratise finance. Whereas the last wave was You First — bank your way, pay your way, invest your way — Fintechs are now advocating for access. In order for the old guard to keep up, let alone compete, they’ll need to adjust their mindset — because when it comes to finance, it’s not just a business, it’s a lifestyle.
