FinTech New Zealand — James Brown
Following the release of their Global FinTech Index, Findexable recently hosted a series of webinars with various FinTech hubs around the world. In “The Asian Century”, FinTech Australia, FinTechNZ and Tokyo FinTech discussed how FinTech hubs compare with startup hubs, what some of the differences are and what that implies in terms of the challenges between building a FinTech hub versus building a startup center.
James Brown, the General Manager of FinTechNZ, shared his perspective on the rankings presented:
Certainly, if I look at New Zealand’s historically, we are a nation of startups and SMEs across a broad spectrum of sectors. FinTech really is still quite a new concept. Depending on the jurisdiction, four or five years ago, “FinTech” as a category did not event exist. So when I look at the the ranking for New Zealand for startups overall, it does not surprise me that we scored better in that area because companies like Xero (a globally popular accounting platform) have over 90% of their customers in that startup/SME space.
When we are talking about collaboration and what you refer to as a “Hub”, then we are starting to see more work being done very specifically in certain sectors and clearly here in New Zealand, FinTech is definitely one given a high priority.
Regarding benchmarks, having and understanding the data points to ascertain where you actually sit against your peers, obviously taking into consideration size of market, etc. is certainly valuable. One also has to consider maturity of the market. So if you look at Singapore, which is now sitting at the top, four and a half years ago, FinTech was still very new for them. Obviously, they have done a great job, and it is not just about support, it is the ability to actually have the government, the regulators, and the industry at the table, having a single conversation. That is something that we started doing last year as well. Never in the history of New Zealand have all of the regulators ever sat in a single room with a single theme, and the theme was, what does the future of financial services in New Zealand look like? And this year, we will have four quarterly meetings with the ministers and all the regulators to continue to build on the opportunities.
Historically, New Zealand was geographically challenged. Actually, New Zealand was the first country in the world to develop the refrigerated ship to bridge our remote location. Now, we have become a globally connected community, so that is no longer a barrier for us. With FinTechNZ, we have been doing work for all of the government agencies, where we reviewed all the thriving FinTech hubs in the world, and benchmarked ourselves against them. That allowed us to have the conversation with the government to highlight some concerns, but also the opportunities for us as a nation that has for many years relied on agriculture and tourism to support our economy. With FinTech and other technology areas, we are now looking at something very scalable, with a low barrier to entry. And if get the proper government regulation and industry support, then you can actually make it happen.
If we are looking at Open Banking, the UK is really not working as effectively as most people would like to believe. Australia will go live a little bit later in the year. Historically, the New Zealand government would look to the UK first, then to Australia, then they would make a decision and generally just follow it. Given that we are a much smaller market, we could probably be a little more agile. We would like to see Open Banking being industry-led with government support. So we set up a working group called “Open Ecosystem”, because we feel open banking is just too narrow. While it might be a good test case, we need to move to a point where data sharing across multiple parts of the consumers’ life is possible, with the usual provisions around liability and privacy. In our market, the incumbents are actually huge supporters, which is a bit different from what you see elsewhere. Six of the Tier One and Tier Two banks have invested into moving open banking forward. We are excited about that and believe it will lead to a good outcome.
We do not tend to talk about unicorns in New Zealand much, because the simple fact is that we are probably not going to produce a large portfolio of them. But having the likes of Xero as a role model, who have been able to take a small product to a global stage and perform very effectively, is certainly valuable. And there are others. So I think it is about how you position it, but also how you use some of the other pieces of the jigsaw. For example, New Zealand is rated first in the world for the ease of doing business, and joint second in the corruption perception index. For me therefore, it is about how we share the story that then allows people to consider New Zealand as a geography of interest. When we were back in the UK in September, wealthy individuals and wealthy families are looking for alternative markets post-Brexit that they can tap into to diversify their portfolios, so that could become quite an exciting opportunity for us.
It is very interesting to see that most FinTech companies are thinking global from day one, and are pursuing a launch into multiple markets simultaneously. Back in the day, from a New Zealand perspective, it would have been Australia first, and then possibly towards Asia. But then you land in 15 different jurisdictions at the same time, and you can only do that successfully if you have collaboration, you only can do that if you have an understanding and appreciation of the local markets. We have build this through New Zealand Trade & Enterprise, and our FinTech partnerships.
Also, we see a move a little bit away from the US. While it is a big market, and there is a lot of opportunity out there, it is also a very difficult market and there is a lot of state-level regulation, so it is not like breaking into one country. On the other hand, it is quite easy to break into parts of Europe, especially with what is going on in places like Paris and Germany. The same is true for Asia, if you post yourself in Singapore or Hong Kong, you can develop a solid base.
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