In our blog 17 March we mentioned the PWC report “How Fintech is shaping financial services”. We’re now seeing more press on how the Australian government is committed to support the industry that is “transforming our financial systems and our economy”.
Fintech is one of the fastest growing sectors in the financial services industry globally and Australia. Fintech is happening fast and some call it a “global wave of fintech disruption”. Indeed the Australian government is providing a boost to Australia’s fintech sector through providing funding to Stone & Chalk.
Sydney based Stone & Chalk is a technology hub created to focus exclusively on cultivating Australia’s fintech eco-system. They have 22 partners and have funded 60 startups in the fintech industry.
But what impact could this possibly have on Accountants?
Consider this article: Australia could introduce a digital version of its dollar, a senior exec at the country’s central bank says, although any state-backed digital currency is in the distant future and likely to circulate in parallel with old fashioned notes and coins.
Wait. Hold up. Did that article just say we might stop using bank notes in Australia. Ok, for those of us that switch off when bitcoin is mentioned, fintech actually might have some impact on Accountants. Before you switch off on Blockchain, have a look at the recent article BlockChain will transform audits.
And what is Fintech anyway? Ok, so Fintech (Financial Technology) is an industry composed of companies that use technology to make financial services more efficient. Fintech companies at the moment are startups that are founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.
And how might this disruption affect accountants? Ok, consider the fintech startup “Robin Hood” which charges $0 for people to buy and sell shares. RobinHood uses technology to cut operating costs to a minimum, and makes its money from interest on uninvested client deposits. If this model succeeds, then it will be a major disruption to the current trading companies operating a fee for trade model. In 9 months of trading, over US$1 billion of trades have been done on the site.
Already we’re seeing online models offering trades in forex and transfers overseas. In place of bricks and mortar it’s now possible to use an online account to get a better margin. These online disruptors are in the early stages of disruption but that disruption is certainly likely to occur quickly. Accountants should be constantly looking for better online offerings for their clients who engage in forex/offshore transfers.
Striking closer to home, and right in the accountants backyard, Non-profit superannuation funds are being told to catch the fintech wave. The big competitor for the super industry is the internet and super funds must improve their services. Without taking on Fintech, the super industry will lose profit for the members.
There’s certainly a lot of movement in the fintech sector, and it’s something accountants need to be monitoring and taking action.