March 13, 2016

FinTech's – What are they and how are they shaping the banking and financial services sector?

Fintech’s are typically financial technology based businesses that use software to provide financial services with a competitive edge to that delivered by more traditional financial based service providers, who rely less on software.  Common areas of financial technology development have been in providing online payment solutions, innovative ways of lending and making loans, equity crowd-funding, data visualization and financial advice.

With the global expansion of online business, the internet continues to provide new opportunities for businesses and in particular the business line of financial services, which are a fundamental component of day to day business.

Major cities, including Hong Kong, Singapore, New York and London, are all seeking to encourage Fintech start-ups.

As more and more Fintech starts-ups are arriving on the scene, keen investors are pouring money into this expanding sector.  That being said, big business has also been taking notice both locally and overseas and getting in on the ground level to obtain early access to new Fintech ideas by supporting the development and incubation period of these revolutionary businesses quite often by offering office space, management advice and venture capital funding.

The Australian economy has seen obvious recent declines in business activity in the mining, oil and gas sector with falling commodity prices and the manufacturing sector losing the local car industry which represents a huge loss for job creation and innovation.

The Australian Federal Government has made recent policy announcements focusing on its intentions to build an Innovation and Science Agenda for the Australia economy, with recent policies focusing on extra funding for innovator’s, assisting research and development and the formation of a Fintech advisory group. The National Innovation and Science Agenda  will drive smart ideas to grow Australia’s strong finance and banking sector with a financial technology edge.

As international trade barriers disappear and the market place is increasingly globalised by the signing of trade agreements, reduction in tariffs and technological advancements, opportunity grows for entrepreneurswith new emboldened ideas to materialize their visions.

Bitcoin, block chain, crowd funding, virtual banking and online lending, are all growth industries which bring about legislative and accounting challenges for government, lawyers, accountants and other complimentary service providers.

The benefits of this emerging sector include a new source of local jobs and economic growth, together with delivering the end user with lower fees, interest rates, real time fund transfers, data analytics, and greater access to funds/capital raising.  We watch on, as this exciting new sector continues to grow and pushes the boundaries of a highly regulated industry historically dominated by large banks and corporations. It’s critical that Australia is not left behind and plays an integral part in the growing online economy.

As a service provider to business (whether you’re an accountant, lawyer, insurance broker, financial advisor etc), advisors like SV Partners have to consider where and how can we play an active part in their growth, be it in assisting investment or the provision of business and complimentary advisory services to such businesses. Contact SV Partners on 1800 246 801 if you would like to speak to one of our expert advisors.

Article written by Tim Brace, Associate Director, Victoria.

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