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Let’s Talk: Competition



Banking | Business Tech | Emerging Tech | Expert | Featured | Finance | Industry Finance | Let's Talk | Opinion | Tech

By Loren Webb

Today we posed the question of competition, and whether the big financial institutions can survive without Fintech or not.

We know that competition in the banking landscape is very low, with the big 4 still holding most of the power in the market. It’s been a subject that we have discussed a lot at Dynamic Business recently, mostly addressing small business loan competition and accessibility, but now we turn our attention to their embrace or failure to embrace new Fintech. 

Does this lack of competition between these financial institutions mean that they are less likely to adopt new FinTech, simply because there is less pressure? They have less of a demand to stay ahead of the curve and perhaps less of a reason to appeal to consumer experience.

Perhaps unlike other industries, banks have no real pressing reason to adapt and change. However leaders that are embracing technological advances and change will likely reap the benefits and start a new competition. So can financial institutions really survive without doing so in the long-term?

Our expert opinion forum below discusses this in more detail.

Leo Tyndall, Founder and CEO of Marketlend

Fintech by itself isn’t going to save banks because no technology can save a system built on out-dated assumptions.  If a bank leverages technology without incorporating a new approach that actually meets the needs of end users, the technology will fall flat. Successful Fintech is about a fuller, more sophisticated awareness of a market, giving SMEs transparency and the application of the right kind of technology to that market.

In our space, SME lending, one of the key elements the banks are missing is the need to lend money without the need for property collateral.  Another issue is the onerous and time consuming hurdles to getting capital that too many SMEs face.  Technology doesn’t solve this kind of thing.  You have to be on a mission to help your SMEs. However technology needs to be used for the right reasons not to hide the costs and bypass the need to help SMEs in ways that truly work for them.

Daniel Foggo, CEO of RateSetter:

Despite what the banks might say, competition in financial services in Australia is dismally low. That’s why personal loan and credit interest rates are sky high. If as a nation we wish to avoid the issues that were revealed in the banking Royal Commission, we need to create a more level playing field and increase competition in financial services.

Open banking will deliver enormous opportunities for FinTechs – firstly by levelling the data playing field with the banks and secondly by allowing FinTechs to distribute their offerings to the mass market much more easily.

We also see great potential for partnership and collaboration between FinTech companies themselves, and also between banks and FinTechs. Open banking facilitates services that allow people to easily view and optimise value across all of their financial activity across all the companies with which they have a product – increasingly, people might have a savings account with one provider, a transaction account with another, and a personal loan with a third.

Mark Fletcher, CEO and co-founder of Cohort Go

All industries need technology in order to survive, and the banking sector is no exception. Look to any Australian Big Four and you’ll see that these well established, large financial institutions are choosing to invest in new and emerging technologies in order to innovate and stay ahead of the curve.

A KPMG report from earlier this year found that Australian FinTech investment reached US$600 million in 2018 alone; with funds being injected primarily into payments, regtech and open banking. FinTech investment is growing, and the big financial institutions who want to survive must look to invest in new technologies to ensure their growth. This is especially true for the growing number of young people – such as international students – who are coming to Australia with high expectations of having a stress free banking experience, that’s both digital and seamless.

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