'Why the UK and Australia are leading the Fintech revolution' By Tess Thomas Head of Investment, UK Department for International Trade
Earlier this month I was fortunate to join the Australian British Fintech Cyber Catalyst (ABFCC) to London alongside a group of leaders from government, industry and academia. It was an exciting week for the UK: The Wimbledon Championships, a heatwave, England ‘coming home’ in the World Cup semi-finals, the resignation of the UK Foreign Minister and a visit from the United States’ President. Despite the distractions, London’s emergence as a pre-eminent global Fintech city was evident everywhere - from ads in the tube to articles in the newspapers.
The UK is already a leader in Financial Services, and is creating the world’s leading Fintech ecosystem.
As the Head of Investment at the UK Department for International Trade based in Sydney, my role is to support innovative and scalable Australian technology businesses to succeed in the UK. It’s a fascinating job as I meet Australia’s leading entrepreneurs who are building the latest technology solutions.
Fintech is worth £6.6bn a year to the UK and growing quickly. Driven by initiatives such as Open Banking and the Global Sandbox - it’s one of the most dynamic sectors in Financial Services. Australia is also a leading Fintech market with an estimated 600 Fintechs operating in Australia in 2017, having more than doubled since 2015.[i]
With the recent signing of the FinTech Bridge Agreement to encourage collaboration between Aussie and British Fintechs and government, regulation and policy, this third ABFCC - with a jam-packed 4-day programme - to explore opportunities in fintech and cyber - was particularly timely.
Sixty delegates - from government Ministers to early stage startups - were handpicked for their individual expertise and contribution to the UK-Australia Fintech and Cyber relationship.
Here’s a summary of the key outtakes that you should know about.
We cannot achieve success in Fintech without Cyber Security at the forefront.
Day one was focused on Cyber Security. The day’s location was the quintessentially British, Hartham Park, a Georgian manor house in Wiltshire, England. Conference delegates heard from UKCloud – responsible for delivering cloud services to the Public sector, Cyber Security case studies and the CEO of AustCyber Michelle Price who interviewed Australia’s Minister for Cyber Security, Angus Taylor. It is clear from discussions that the UK and Australia are ideally placed to be leaders in Cyber and collaborate given their shared history and values and co-operation on issues of security. Trust and security will be more important than ever for the future success of banks and Fintechs.
If you don’t know about Open Banking you need to.
Day two’s standout was Imran Gulamhuseinwala, Head of Fintech at EY in the UK and implementation Trustee of Open Banking Limited. This man is leading the Open Banking revolution. Open Banking forces banks and regulated third parties to share their data if customers agree. Greater financial transparency options for consumers and increased competition will be the result. The UK is leading the world having introduced true Open Banking in January this year and Australia is soon to follow.
Sharing talent between the UK and Australia will be a key driver for success in Fintech.
Day three continued with discussions on the need to digitise the Fintech Bridge and have an open services portal for Fintechs looking to set up in each other’s jurisdiction. Sharing talent was a key theme. The UK’s response is its new Startup Visa, whilst Australia is piloting the Talent Scheme for Entrepreneurs. We have already seen some great partnerships formed between British and Aussie Fintechs and Cyber companies: Crowd2Fund and InDebted, DigiMe and ID Exchange. The regulators, the UK Financial Conduct Authority (FCA) and ASIC are working together on sandboxes as are the industry bodies, Innovate Finance and FinTech Australia.
Collaboration between cross-border regulators and industry is vital.
We are watching Innovate Finance and the FCA’s development of a Global Sandbox closely. This will enable Fintech firms to carry out tests in different countries at the same time and help watchdogs identify and solve common cross-border problems. Due to the diverse regulatory structures and features of existing sandboxes, a full multilateral sandbox - which allows concurrent testing and launch across multiple jurisdictions - is an ambitious goal.
Banks are going to deconstruct and reconstruct to adapt to human needs.
Day four focused on the interoperability between banks and Fintechs. Both Aussie and British banks are reinventing around life milestones to remain relevant - marriage, starting a family and buying a house are the focus of their innovations to reduce complexities in consumers’ lives. The Bank of England’s Fintech Hub is supporting tech development in Financial Services: specifically, Artificial Intelligence and Cryptocurrencies; Macquarie Bank’s VC arm in the UK is investing in the latest Cyber Security developments and; CBA’s Innovation Lab in London is allowing Aussie startups visiting the region to work from the lab. ATOM, the UK’s first digital bank is pioneering the use of facial recognition biometrics for extra customer security. One of the delegates was Aussie born Volt - Australia’s first digital startup to get a restricted banking licence. Volt’s CEO Steve Weston has worked in banking in the UK – a commonality among the delegates. Volt will follow the path of the UK bank disrupters Monzo and Revolut- improving customers’ banking experiences - and is keen to do things differently.
Australia’s got talent.
Another of the delegates, Trade Ledger announced their EU HQ during the Catalyst. Trade Ledger won an Open Innovation Banking Award from Barclays Bank and will be the world’s first corporate open banking lending platform. I am sure we will also be hearing more about the other impressive Australian sponsored delegates on the mission: Everproof, TRAction Fintech, Adviser Ratings, InDebted, CYDARM Technologies, HyperIntel, Airlock Digital, Aleron and Randtronics – all pioneers in their field.
The evenings were special too. We ate dinner on the iconic Tower Bridge and shared Australian pinot with none other than the Lord Mayor of the City of London at the Guildhall.
It was fitting to end the conference with a conversation between Andrew Corbett-Jones, Head of Sydney’s Tyro FinTech Hub and Mike Smith, former CEO of ANZ and current Chair of Melbourne’s York Buttery Factory Tech Hub. Mike gave his expert advice on how we (Australia and the UK) will manage the next technical revolution and the future of Financial Services. Anyone that can survive a gun-shot (Mike Smith survived an assassination attempt whilst working in Argentina) and bring a bank out of the GFC unscathed (became CEO of ANZ in October 2007) deserves full attention. In his words, “Money is the most sensitive commodity there is.”
Building a bank may become easier than we think.
However security and scalability will be a challenge. Australia and the UK need to work together and remain open across government, industry and regulation. The ABFCC catalyst was the perfect…catalyst for this.
Tess Thomas is Head of Investment at the UK Department for International Trade (DIT) based in Sydney. If you are an Australian company interested in expanding to the UK or finding out more about the FinTech Bridge, DIT can provide valuable support at no cost. You can contact Tess at firstname.lastname@example.org