Australia could soon become the FinTech Hub of Asia by eliminating regulatory complexities that have previously held the nation’s visionary start-up companies back.
Under changes announced by the Australian Government, start-up companies can now test and evolve their business models with customers in a regulatory ‘sandbox,’ without first having to obtain a financial services licence early on.
It means more entrepreneurs will spend more time building business ideas and less time trying to meet complex financial services regulations.
The development will help encourage some of Australia’s best and brightest bankers to leave the comfort of the ‘big four’ banks and venture out on their own with disruptive new ideas.
Australia’s financial services sector is the largest contributor to the national economy, providing about $140 billion to GDP last year, and employing 450,000 people.
The Australian Government’s package of measures will help unleash a new generation of entrepreneurs and investors who want to make everything we do quicker, easier and more productive.
It’s worth noting that FinTech investment around the world reached an estimated $30 billion, a jump of about seven-fold in only three years.
Australia needs to make itself FinTech friendly if it wants to set itself up for the next generation of economic growth.
If it does, Australia could become the FinTech Hub of Asia, servicing a market of more than three billion people, including a rampant Chinese economy.
Will all the banks survive?
FinTech is disrupting banking so quickly it is possible that one of Australia’s big four banks may no longer exist in a generation.
Australia is now creating an eco-system of FinTech start-up companies that are working together to provide a 21st century suite of banking services for customers and businesses.
What that means is that the old and slow banks may be replaced by 100 smaller organisations working together.
It is possible that within 20 years one of the current big four banks will no longer be with us. The only question is, which one will it be?
While most banks have been reluctant to speak publicly about the challenges posed by FinTechs, Commonwealth Bank CEO Ian Narev told a gathering at The Centre for Independent Studies earlier this month that his organisation would be ‘toast’ within 10 years if it didn’t innovate.
Mr Narev refuted the notion that innovation and technology was only the domain of the start-up, describing the Commonwealth Bank as the “big dog sleeping on the porch”.
Marrying tech and banking
Tyro Payments is Australia’s only technology company with a banking licence. It works collaboratively with other tech companies to provide end-to-end banking solutions for Australia’s 2.1 million small and medium sized businesses.
Early last year, Tyro took this a step further by opening Australia’s first FinTech Hub, designed to foster new ideas and help Australian entrepreneurs build their dreams.
We believe FinTech is going to revolutionise how consumers and businesses interact in the future. But individual FinTech companies can’t thrive in an analogue world, we need to create a digital ecosystem for new ideas to grow and prosper.
For this reason, Tyro created the Tyro FinTech Hub in early 2015 in Sydney as Australia’s first dedicated space for fintech start-ups.