According to Tom Durick from the CSIRO’s data innovation group Data 61, the hype cycle around fintech reached its height last year and probably entered the “trough of disillusion at the beginning of this year” but right now it’s on the rise again as we’re seeing it go “beyond the proof of concept”.
Real money moves fintech beyond a concept
By Mark Eggleton
According to Tom Durick from the CSIRO’s data innovation group Data 61, the hype cycle around fintech reached its height last year and probably entered the “trough of disillusion at the beginning of this year” but right now it’s on the rise again as we’re seeing it go “beyond the proof of concept”.
Mr Durick was speaking at the Financial Services Council Leaders’ Summit in Sydney, as part of a panel discussion “Fintech – Cutting through the hype”.
“We’re now starting to see people with domain expertise such as the ASX putting money towards it [fintech] to solve a problem. It’s a realistic proposition and not just hype. While there are some potholes along the way, there are some real benefits down the track.”
Yet while Mr Durick was relatively sanguine about the state of the nation’s fintech sector, fellow panellist and Chief Executive Officer of Fintech Australia, Danielle Szetho said there’s a clear belief in the fintech sector that the Government is not doing enough to support the community.
Ms Szetho suggested establishing a data sandbox akin to the Government’s regulatory sandbox where start-ups could have access to data and information to test business ideas and prove their concepts before they go and present to a business.
More experience needed in fintech market
ASX Limited’s General Manager Equity Post Trade Services, Cliff Richards warned against giving the fintech community the red carpet treatment.
“We’ve looked at hundreds of fintechs over the last few years. We just can’t afford to invest significant amounts of capital and precious time in organisations that we would have to devote so much effort in getting them up that maturity curve of understanding the dimensions of risk.
“I don’t want it to be too easy for fintechs. This universe of 100 per cent of fintechs is quickly narrowed to 1 or 2 per cent. I don’t think we should allow every fintech to stand-up. You want to see them struggle and fight just like you see at the big end of town,” Mr Richards said.
Collaboration – a thing of the future?
Managing Director of The Fold Legal, Claire Wivell Plater suggested established industry players and fintechs don’t really understand what collaboration looks like at the moment.
“There isn’t a dialogue happening (in a creative sense) between ASIC or Treasury and the wealth management industry about what would a wealth management regulatory framework look like if we put it on blockchain,” Ms Wivell Plater said.
For Mr Richards, the current idea that anything other than instantaneous is bad is a flawed concept.
“We want individuals who have an appreciation of the realities of working in the regulated world where you are dealing with other people’s money plus the technology. Sure we need the utopian vision of where the world should be but in terms of mature institutions working with fintechs, you need them to understand the actual problems we’re trying to solve,” Mr Richards said.
Mr Durick agreed technology is not a panacea for every business. He said technology is a component in the system - it’s not the system itself.
Fintech into the future
As for where the fintech sector is heading in the next 10 years, panellists agreed we will see a reshaping of the financial services sector.
Ms Wivell Plater said there will be a completely different landscape but we don’t really know what that future will look like yet.
“What it won’t be, is the banks just doing what they do now with technology,” she said.
In the meantime, there needs to be more local investment in the sector at it has been traditionally weak although Ms Szetho said it’s on the rise.
More positively, we’re attracting interest from international investors as the domestic sector starts to mature.
Part of that interest can be attributed to investors recognising Australian fintechs are being led by senior executives with plenty of relevant domain experience.
This conversation was part of the 2017 FSC Leaders Summit in Sydney on July 26.