NSW urged to lift FinTech efforts to protect jobs

NSW urged to lift FinTech efforts to protect jobs
July 31, 2017 Jordan Roberts

Source: Australian Financial Review
Author: James Eyers

31 July, 2017

The NSW government needs to lift efforts to ensure Sydney captures new financial services jobs in fintech as competition from the likes of Melbourne and Singapore to attract them intensifies, says a report prepared for the Committee for Sydney by KPMG, to be released on Tuesday.

With fintech automation set to slice thousands of paper-pushing jobs in financial services incumbents over the coming years, a battle is in progress to attract the start-ups and technology giants redefining the future of banking. The Committee for Sydney report, titled Scaling the fintech opportunity for Sydney and Australia, urges government to get more active promoting Australia and Sydney as a leading global financial services centre with a focus on fintech and digital innovation.

The number of fintech start-ups in Australia has increased from less than 100 in 2014 to an estimated 579 today, with 59 per cent based in Sydney. These start-ups are employing more than 10,000 people, the report says. This number is expected to grow substantially, particularly if the start-ups can attract customers to allow them to scale-up.

Drivers of fintech include declining trust in major institutions, dropping loyalty of bank customers, embracing of self-service, and growing customer demand for faster, more convenient and accessible finance and payment services embedded into their online experiences. Regulatory support for start-ups is also helping, the report says.

Its author Ian Pollari, KPMG’s national banking head and global co-leader of fintech, said there has been plenty of talk about the fintech opportunity over the past three years and now the sector needs to show it is capable of delivering by shifting its focus on outcomes.

Despite a global slide in fintech investment last year, Australian fintech investment remained strong with $US675 million ($845.5 million) invested across fintech 25 deals, up from $US185 million across 23 deals in 2015, KPMG found. Asian fintech investment also hit a high in 2016 at $US8.6 billion, with seven of the top 10 deals falling into the payments or wealth management verticals.

The report says Sydney has a competitive advantage in niche areas including payments, blockchain and regtech – which are all exportable. The state government should be seeking to attract global talent to these “priority areas” areas and then exporting the products developed to banks abroad. The arrival of the “new payments platform” later this year should provide a big boost to payment innovation, KPMG finds.

The willingness of the incumbent financial institutions to explore fintech opportunities should be a big selling point; the report contains detailed analysis of the fintech initiatives at each of the big four banks and Macquarie, along with IAG, AMP, TAL, Suncorp and, at the mutual bank level, CUA, BeyondBank, Teachers Mutual Bank and Heritage Bank.

The report finds 13.5 per cent of the active fintech companies in Australia are headquartered offshore; they include OnDeck, Square, Stripe, Ripple and Digital Asset Holdings (all from the US), Transferwise (UK), OurCrowd (Israel) and Spotcap (Germany).

The report also calls on the federal government to help expedite policy frameworks to open up “enabling” areas such as digital identity, open data and cyber security.

It encourages policy makers to create more effective mechanisms to educate consumers and businesses on digital financial services to help raise awareness and to engage the university sector and research institutes, including the CSIRO’s Data61, to get involved studying fintech thematics.

Tim Williams, CEO of Committee for Sydney said: “Modern knowledge economies thrive on agglomeration, collaborative diversity and convergence and the innovation they collectively promote. Fintech is now a key force supporting the forward-looking knowledge economy of the state and indeed the nation.”

Read the piece here