I’ve written about the Australian in the past, and how the country is conditioned by its isolation and size. You can read more about it in the Introduction to the Australian Startup Ecosystem piece I wrote for this blog.
These two factors have also conditioned, to a lesser extent, the evolution of its banking system, which is the fourth largest pool of investment fund assets in the world and the largest in Asia.
Due to this privileged position, Australian banks have increased their influence in Asia since the first half of the 20th century. This, combined with a certain degree of protectionism during a big part of the last century, has protected against the introduction of external competitors, which allowed for the creation of the big four. These four Australian banks are some of the most significant financial institutions in the world.
These banks have benefited from a relatively stable and robust economy, creating a cultural and geographic position that sets Australia as a great intermediary with the Asian market and a natural destination for financial and human capital.
What is the result of combining a robust banking system and a dynamic startup ecosystem? The emergence of some of the strongest and most interesting fintech startups in the world — only the US had more startups than Australia in the top 100 Fintech startups list.
This situation has been made possible by the continuous investments by all the big four, trying to innovate and add value to the user experience, mostly through the creation and acquisition of new fintech startups. However, the threats from the technologic sector do not only come from the US and silicon valley, but also from Asia. In such an environment, the convergence of ideas and aggressive competition results in fast innovation. An innovation that permeates into the rest of society: this year we’ve seen how the percentage of contactless payments increased up to 92%.
How does all this innovation solidify? In businesses specialising in payments, lends, investment and generating added value for current financial entities.
Some more concrete examples of the Australian Fintech Startups:
- Tyro: Tyro is a bank designed with a business-first philosophy. Based on EFTPOS terminals for hospitality broadly used in Australia, this bank developed a set of financial services around them. The result is an ecosystem specialised in solutions for small business, from lends to business accounts and loans, Tyro’s laser-focus on business allows them to generate some great information on their needs.
- BrickX: With a housing sector growing rapidly during the last few decades, the average price of a house in Australia has increased sevenfold in the last 30 years. This has turned housing in Australia in something that is unreachable for low and medium incomes but also one of the safest investments possible. BrickX tries to provide a solution. Can’t you afford a home? Buy a single brick! This micro-investment solution divides houses into $100 stocks that can be bought by their users. This provides a way of investing in real estate to individuals and families who cannot afford a whole house, or that want to diversify their portfolio.
- Prospa: A fintech startup specialised in micro-lending for small business in 3 to 24-month terms that can be paid daily or weekly. The startup presumes about the user experience it offers to their users and the unique knowledge they’re generating about their clients’ needs.
- Raiz: Formerly known as Acorns, this app allows you to invest your spare change from all your credit cards transactions. Every time you buy something, the system will round up to a certain quantity and invest the rest in their private investment portfolio. The goal is that, with time and almost without noticing, you will generate savings and also interest on those savings.
- Afterpay: Afterpay is a startup that offers users to buy (generally online) and pay in 4 different terms, every two weeks after the initial purchase. The startup gets its revenue from the store, charging 4% to 6% of the purchase when this payment option is chosen and also in the form of penalties for late payments.
- zip: zip competes with Afterpay going for a similar market. After the investment of one of Australia’s major banks, the company has pivoted into two different models: zipPay for small purchases online, and zipMoney for larger, more substantial lends. Their secret weapon? All the data and knowledge they’re generating about their users makes them not only the ideal ally of a bank but also a competitor of payment platforms such as VISA or Mastercard in its own right.
- Hyper Anna: An artificial intelligence with a natural language interface for big companies. Do you need to have a report with certain info? Hyper Anna’s goal is to be able to put it together as long as it has access to the data. In short, a Siri for CEOs.
There are many more examples: lends (Valiant, MoneyMe, Tic:Toc), international transactions (AirWallex), insurance (CoverGenious) or finance monitoring (Money Brilliant).
The fintech sector in Australia is a big unknown for many entrepreneurs with Sydney and Melbourne as the natural go-to destinations for anyway looking at joining this sector.
Bruno grows startups at We Are Visionists and teaches other humans to communicate better on the cyberspace at The University of Sydney. He also has a website.