Fintechs will transform the way banks in Asia Pacific interact with their customers over the next few years as banks look to offer more relevant “needs-based” solutions.

Fintechs will transform the way banks in Asia Pacific interact with their customers over the next few years as banks look to offer more relevant “needs-based” solutions, according to Ethan Wang, Research Director at Gartner.

With Sydney’s Fintech sector booming, Wang identified three key trends in how startups will change the retail banking landscape across Asia Pacific: a movement towards open banking; the provision of relevant insights by banks; and enhancements in customer experience.

“Fintechs [will] push banks to open up their ATIs as banks [begin] building their own ecosystems,” he said.

“They will then [force] banks to offer more needs-based contextualised solutions to narrow the segmentation of digital customers. And thirdly, Fintechs will push banks to offer a frictionless experience to customers.”

The intelligent use of data analytics by Fintechs will mean banks need to offer more relevant insights to remain competitive in the digital age.

Australian Fintech SelfWealth uses a variety of algorithms, data analytics and diagnostics that examine the portfolios of members to give contextualised wealth check scores.

Andrew Ward, Founder of SelfWealth, a Peer-to-Peer investing platform, attributed the rise of Fintechs over the last few years to the onset of cloud technology, as financial disruptors looked to “attack the big profits” of banks by harnessing the potential of cloud and providing more intelligent solutions for individuals.

“I wanted to create something that provided everything that the wealth management industry and the financial advice industry provided by being self-directed [and] by having a set subscription fee,” Ward said.

 “P2P investing evolved out of the need to create services in the traditional industry but have them self-directed. We built a solution that actually caters for that and does so in a seamless and intelligent way.”

For self-directed investors, SelfWealth allows members to filter through community portfolios and receive a tailored analysis to help inform their investment decisions.

“To enable someone who is not experienced, who has not done it before, to invest on their own, [P2P technology] has to be really simple and easy. It has to be like picking up an iPhone, which is frictionless and seamless,” Ward added.

“Disruption [and] the utilisation of wasted resources is a lot of the drive behind the shared economy or collaborative consumption today.”

Collaboration is key for Fintechs
Located in Ultimo, Sydney, Fishburners is Australia’s largest startup space dedicated to supporting entrepreneurs and Fintechs to promote their business through community collaboration.  

The non-profit organisation has 90 registered companies and 171 members who have access to a variety of service providers, workshops, mentors and investors to help grow their business.

Murray Hurps, General Manager of Fishburners, said the startup space in Australia has evolved significantly over the last four years, arguing Fintechs were now a key focus for financial institutions, particularly in terms of encouraging growth and greater collaboration with them.

“I spent 16 years running software companies and when I started, Sydney was a terrible place to run a software company,” he said.

“It is nice to see the potential of Sydney [now] emerging as a Fintech hub, one that is relevant worldwide and attracting people to Sydney. I think that banks in particular are being very supportive of Fintechs in Australia.”

Sydney set to overtake Hong Kong and Singapore as regional Fintech hub
Fintechs will increasingly look towards Sydney as the city becomes a thriving regional hub for startups over the next few years, eclipsing Singapore and Hong Kong who have struggled to promote themselves in Asia Pacific, according to a report by KPMG.

The report titled Unlocking the Potential: the Fintech Opportunity for Sydney identifies Singapore and Hong Kong as two key emerging centres for Fintech development in Asia Pacific, though access to private sector venture capital investment remains a significant hurdle for both cities.

“There is a window of opportunity for Sydney to position itself as the leading regional Fintech hub, as Hong Kong and Singapore have not aligned efforts within their respective jurisdictions around Fintech nor promoted themselves internationally,” the report states.

In Singapore, the government has invested heavily in the promotion of an innovation ecosystem through direct investment, tax incentives, and measures to make Singapore an attractive destination for entrepreneurs.

“Singapore’s strategic location, conducive cultural and legal factors, developed financial services sector and ICT capabilities provide a fertile environment for Fintech,” the report states.

According to the report, global growth in the Fintech sector is accelerating with financing activity predicted to rise up to US $8 billion by 2018, with Sydney seen to be ripe for new Fintech development and innovation.

“The tech startup sector has the potential to contribute A$109 billion or 4% of GDP to the Australian economy and 540,000 jobs by 2033 with a concerted effort from entrepreneurs, educators, the government and corporate Australia.”

According to KPMG’s findings, the growth of the Fintech scene in Sydney can be traced to a convergence of six key trends which pose significant implications for banks: the proliferation of electronic transactions, the need for greater cost reduction, the increasing accessibility of computing and IT services, innovations in technology, the ubiquity of data and changing customer behaviour.