Globalisation of FinTech: Are we learning from our neighbours?
Most areas in the fintech space are hotly contested. Anyone watching the fintech space can feel overwhelmed by the sheer volume of perspectives that emerge when a new product is launched, an article is written or a tweet is sent. And that is largely because fintech is global.
Fintech companies may operate in their own local markets and compete with, or “disrupt”, local banks, but financial technology as a whole is a global dealing. Any discussion of fintech needs to have this perspective.
This is not just a matter of having the correct frame of reference for discussion and debate, it ensures we find the right way to move forward in an area that is changing so many aspects of our lives.
The traditional way of competing in finance was to look at your own market and do better. While financial service providers still deliver revolutionary products – for example, Australian banks’ pioneering of mobile payments – what fintech is showing is that the world is itself a market, and it needs to be treated as such.
Let’s take, for instance, the case of digibank, India’s first mobile-only bank.
Announced at the end of April 2016, digibank lets customers open an account without any paperwork or signatures. They have access to 24/7 support through a virtual assistant, and get a virtual Visa debit card and no minimum balance requirements. If they opt for the digiSavings account, they’ll receive 7% interest on savings.
The bank itself is a revolutionary service, but so it’s also interesting how it came about. It was opened by Singapore’s DBS bank, which acquired a minority stake in US-based Kasisto, which focuses on AI. According to DBS, which is Singapore’s largest lender, digibank was launched in a bid to expand its retail presence as well as tap into India’s digital and fintech revolution.
digibank, while only serving a local market, is a global fintech company. Not only are international companies involved in, it has received attention from a worldwide audience. When innovative startups launch, our global fintech community notices, connects and shares – when something is worth sharing.
The reaction of the international fintech community – made up of stakeholders, commentators and enthusiasts – was what you would expect for a service like this. Breakdowns of the product were followed by analyses of its benefits and lamenting the fate of consumers who couldn’t enjoy those benefits. digibank is an example of what banking could be, but for everywhere except for India, that potential isn’t being realised.
The disruption in fintech is not real disruption if it only affects its immediate surroundings. Fintech doesn’t operate within a narrow sphere – everyone operating in the space is connected and aware of what’s happening elsewhere. Most fintech research, such as PwC’s Blurred Lines fintech report, undertakes a thorough analysis of international “hubs”, usually including Europe, the UK, the US, Latin America, Africa, Asia and Australia. Articles reporting on a new startup, technology or product firmly plant it within its domestic context, and often compare it to what’s happening in markets across the globe.
There’s no excuse for local fintech development without a global lens. This is not only true for startups looking to develop products, but also for governments trying to regulate. There are myriad products, services and technologies that exist in the international fintech space, and they will operate differently within local markets.
The essence of fintech is disruption, and if a better technology or system is in existence, your market may be the next one to be disrupted.
Elizabeth Barry, Senior Writer at finder.com.au, has joined Australian FinTech as a guest writer. She has been writing about personal finance for over two years and has firsthand experience in the space having worked at finder.com.au in its start-up phase.
She is fascinated with the level of innovation happening in fintech and the way Australia is responding – at the individual, business and government level. She believes that established companies are ripe for disruption and that the fintech space is ready for acceleration.
She will be keeping an eye on the space as it grows and is eager to write about emerging developments on Australian FinTech.