This post covers Australia with an analysis of their Fintech companies and initiatives by banks.
AUSTRALIA
1. Australia is certainly the global capital for in-bank innovations. Unlike in many other parts of the world, in Australia the large brick and mortar banks are considered highly innovative. Three of the four largest Australian banks are among the 50 most innovative companies of the continent. The Commonwealth Bank of Australia is considered to be the second most innovative company in Australia. Westpack is also in the first ten, while National Australia Bank is 14th, and ANZ bank is just slightly off the list of the top 50. What is also very significant about this is that all four gained their great positions in the last 10 years.
2. The innovative nature of Australian banks is so appreciated that international consulting companies are organizing ‘Innovation-Tours’ for foreign experts to visit them.
3. The Australian banking market is highly competitive and clearly, transparently and smartly regulated. These are certainly among the reasons that drive Australian in-bank innovations. Other experts around the world – are still researching why the Australian banking sector stands out so much in a positive sense.
4. Australian in-bank innovations deserve a separate study. The following Australian FinTech innovation shows that, even in a very highly innovative, super- competitive banking environment, there is space for external FinTech to flourish.
AUSTRALIA FINTECH (NIMBLE)
1. Nimble’s mission tells it all: “To delight people by making borrowing simple, fast and stress- free.” Nimble issues loans of USD 100 to USD 1200 to private individuals within 60 minutes of application. The application process is perfectly paper-free.
2. Applicants become Nimble Members, meaning after their first loan is repaid they can re-apply in a much more simple way. But, even the first applications are very simple. The average application time for an inaugural Nimble loan is 5 minutes and 44 seconds.
3. Nimble is quick, paperless, simple and charming, but it is expensive. There are two fees:
(i) Establishment Fee: 20 percent of the capital.
(ii) Interest: 4 percent per month of the principal. This is a simple cost-structure, and, in spite of being a very expensive loan, Interest is not charged on the total outstanding amount (principal + interest) but only on the principal. There is no reverse annuity calculation.
4. Nimble issues the ‘Nimble VISA Prepaid Card’. Nimble has approved cca 775000 loans since 2005. Nimble has a good slogan: “Smart little loans”, and a good logo which is iconic and un-bank- like.
5. In spite of some critics saying that Nimble is just another pay-day-loan provider, Nimble pays large marketing, brand-building and positioning attention to lovability. Nimble got to the scale during the years that they were running TV commercials.Nimble has a close cooperation with Commonwealth Bank, but no ownership is taken in Nimble by the bank.
6. Under-promise, over-deliver: Nimble promises that they put the money in the applicant’s account within 60 minutes of approval. But, they publish every day the average payment time, and it’s often less than 12 minutes. A problem is that Nimble does not renew loans by rolling them over or by refinancing them.
BANKING INNOVATION INITIATIVES
1. Large global banks have started to spend a very significant amount of money in FinTech, and 2015 will be a breakthrough year.
(i) Citi Innovation Lab: A client experience and collaboration center.
(ii) Commonwealth Bank Innovation Lab: Idea incubator and accelerator.
(iii) BBVA Innovation Center: From ideas to prototypes and from prototypes to tests.
(iv) Capital One Bank Lab: To behave as a technology company rather than a bank.
(v) ING Customer Experience Center: Modeling of consumer behavior related to innovations.
2. Global banks tend to set up dedicated FinTech venture capital arms or they focus their general venture capital activity more and more on FinTech.
(i) AmEx Ventures: AmEx’s strategic investment group to enhance core capabilities.
(ii)Citi Ventures: To cooperate with ventures that have the potential to disrupt the financial
industry.
(iii) BBVA Ventures: Strategic opportunities that can support the bank's innovation agenda.
(iv)SBT Venture Capital: FinTech VC fund investing in the most promising growth stage companies.
(Source: MarketResearch)
