With the continuation of Moore’s Law and computing power predicted to exceed that of human brains by 2045, it’s a time of extraordinary technological growth and social change. Technology is reshaping the entire financial services ecosystem and driving enhanced working efficiencies.
Legacy institutions which once held a stronghold over market share are being challenged by fintech innovators disrupting the industry and forcing existing businesses to ‘adapt or die’. In fact, PwC Australia found that a telling 83 per cent of traditional financial services firms believe their business is at risk from a disrupter.
The financial services sector is the largest contributor to Australia’s economy, employing thousands and providing over $140bn to its GDP. And as the gateway into Asia, the Australian market has become an increasingly attractive proposition for investors. In fact, according to research from KPMG, Australia received more than $626 million in fintech investment last year, with Sydney now ranking in the top ten fintech hubs. With many global banking brands setting up their Asian headquarters in Sydney, further development of fintech ecosystems is also expected across other Australian cities, such as Melbourne and Perth.
As well as its locality, key to growth within the region has been the reduction of certain legislative red tape, following liaisons between the government and the Australian Securities and Investments Commission (ASIC). This has enabled early stage start ups to test APIs in a regulatory ‘sandbox’ without first securing a financial services license, more efficiently managing regulatory risks and reducing the cost and time to market.
So with significant sums of capital funding future fintech growth, what are the major trends afoot, and how will they impact business?
Focus will remain on one of the most institutionalised sectors within financial services - insurance, with analysts predicting that ‘Insurtech’ will continue to advance as it catches up with the pace of change seen in other sectors. This may involve the use of AI and robotics to take on certain admin functions for brokers, or purpose built apps to automate insurance premiums and quotes for customers.
Digital payments will evolve to be worth$1.8bn by 2020, as innovation diversifies how we move our money. Mobile wallets such as Android pay, launched in Australia last July, and developments within fraud detection will be some of the major trends that shape the future of payments processing. Within this, Bitcoin, continues to command headlines as the world’s ‘first decentralised digital currency’. Powered by blockchain technology, Bitcoin was first created by the enigmatic computer scientist known as ‘Satoshi Nakamoto’ in 2008. Its purpose was to circumvent state sanctioned currency controls and streamline online transactions by removing third parties. Supporters of the movement are excited by its endless possibilities, with blockchain theoretically allowing users to transfer goods, services and IP as well as funds, by replacing our existing centralised system.
Sustained growth within artificial intelligence (AI) is set to drive global GDP 14 per cent higher by 2030, chiefly derived from increased productivity gains in the workplace. This includes the automation of routine tasks to enable employees to focus on value-adding work. One sector these technologies have seen significant growth in is accounting and bookkeeping, with 83% of accountants claiming that an understanding of technology is now as important as knowledge of the trade itself.
Key to this movement are automated data management solutions such as AutoEntry, a disruptive mobile and web based solution which simplifies accounts preparation for accountants and bookkeepers. Launched last year with over 25,000 businesses set up on the platform worldwide, AutoEntry captures and analyses scanned and photographed purchase and sales invoices, receipts, bank and card statements, automating data entry into accounting solutions such as Xero, QuickBooks, MYOB and Reckon. It helps users to access their financial records remotely, and upload paper documents such as bills invoices and receipts at their convenience via a mobile app.
The future is digital, so to stay ahead, firms should incorporate automated, mobile, and cloud-based technologies into their IT infrastructure where possible, to engage with customers on their terms and maintain relationships. The right application of technology will also empower businesses to make redundant outdated and time consuming practices, whilst transforming service delivery.
With its strength within financial services, coupled with local talent and readily available funding, Australia is set to become a fintech superpower. This will impact the growth of other professional services and encourage innovation in competencies that benefit the broader economy. Growing its fintech prowess will also position Australia to capitalise on new trading opportunities from growing economies such as within Asia, ultimately providing greater choice and efficiency for local businesses, and more personalised financial services for consumers. With the development of existing trends, and the emergence of new ones, the next few years are certain to be an exciting time of change and opportunity.