The finance industry has many dimensions and FinTechs are transforming them all.
According to KPMG, the number of FinTech startups in Australia has increased from less than 100 in 2014 to approximately 650+ companies today, and investment in the sector has increased from $US53 million in 2012 to over $US600 million in 20181.
To put that in perspective, more than half of all digitally active Australians (58%) are now using FinTech products and services2.
There are many notable companies who have been responsible for driving such rapid growth in the FinTech category, from Afterpay which reinvented the good-old layby, to Airwallex which has revolutionised the way companies process international payments. In today’s article we are shining a spotlight on a six new players, and the tech which is transforming our financial lives.
For more on FinTech and how it has evolved, see our article The FinTech Phenomenon.
DIGITAL BANKS or NEOBANKS | Xinja
Xinja is an independent, 100% digital, neobank for Australians. Neobanks are disrupting the Australian banking industry by replacing traditional brick and mortar bank branches with easy-to-use mobile phone applications that allow customers to split bills, track spending habits and freeze lost cards.
A beta version of the Xinja application and prepaid card are currently available on the Apple App Store and Google Play. This product enables users to set up an account, top up their Tap & Go prepaid card, and track their spending. New users may no longer apply for the prepaid card because Xinja is aiming to launch the Xinja Bank account in the near future, once they receive their full banking licence from APRA.
Xinja’s founder, Eric, wants to ‘bring back the role of the good banker’. Unlike the days when bankers such as Eric’s father-in-law had meaningful relationships with the individuals and families who relied on them, the relationship millennials have with banks today is confusing and impersonal. Eric is using technology to bring back mindfulness of a customer’s financial activity and guidance which improves the financial habits and circumstances of individuals.
PERSONAL FINANCE | Pocketbook
Pocketbook is a free budget planner and personal finance desktop and mobile application which allows users to set up and manage budgets, track spending and manage bills. After adding your bank accounts to your Pocketbook account, the app organises your spending into categories such as Food & Drinks, Car Expenses and Shopping, which allows you to see where money is being spent. From here, you can set up budgets for each category. Smart notifications keep you informed about any fees charged to your bank accounts.
SUPERANNUATION | Zuper
Zuper is disrupting the super industry by giving customers more control over their investment choices. Members are given the choice of investing a portion of their portfolio (up to 20%) in ‘mega trends’ including green energy, healthcare, technology and diversity. They are also given the opportunity to vote on creating new portfolios via an ‘investment collection’ and get access to professional development courses to lift their earnings potential.
Zuper’s funds exclude investments in industries with harmful impacts on society. For example, the Zuper Impact fund excludes investments in tobacco and nuclear weapons, and the Zuper Impact+ fund excludes investments in gambling, pornography, alcohol and carbon intensive fossil fuels.
LENDING | Athena
Athena is disrupting the home loan market, with loans backed directly by the superannuation industry. According to the founders, Nathan Walsh and Michael Starkey who are ex-NAB bankers, the cloud-based digital home loan platform could save some borrowers taking home loans from the big four banks, up to $100,000 over the life of a loan. Superannuation funds already have large investments in Australian mortgage assets via banks. It’s a ‘sweet deal’ for banks because they can charge high mortgage interest rates by giving out loans with money invested by superannuation funds. By investing in home loans with Athena, super funds can continue to reap returns from investing in mortgage assets, whilst customers can take advantage of lower interest rates.
LENDING | Prospa
Prospa is Australia’s number one online lender to small businesses. It offers business loans between $5,000 and $300,000 with no security required for up to $100,000 and rates from 9.9% per annum. The application process takes 10 minutes and borrowers can obtain same day approval. In March 2019, Prospa reported over $1 billion in business loans to more than 19,000 across Australia and New Zealand. In 2018, Prospa’s business loans added nearly $1.7 billion to Australia’s GDP
INVESTING | Stake
Stake is a desktop and mobile trading application that enables Australians to access and trade over 3000 US stocks and ETFs without brokerage fees. This makes the process of trading shares online more efficient and inexpensive. While the app is free to download and there are no brokerage fees, Stake charges a portion of your foreign exchange transfers. For every $100 you transfer, Stake charges $US0.70. While brokers on traditional share trading platforms charge a fee for every trade you make, Stake’s fees are competitive as you can transfer your funds all in one go, and invest in multiple shares (with a minimum stake of $US50 in each).
INVESTING | Six Park
The founders, Pat Garrett and Brian Watson, were driven to build a solution to a major problem in Australia’s investment management industry – that it was difficult, confusing, expensive and frustrating for most Australian investors to get professional and low-cost investment advice. Six Park on-boards users by asking them a series of questions which captures their personal circumstances, financial priorities and risk tolerance. Responses are matched to a recommended asset allocation strategy. The user signs up and sets up a Macquarie CMA. Six Park invests the customer’s funds into exchange traded funds (ETFs) that reflect the individual’s characteristics and circumstances.
CRYPTOCURRENCY | CoinSpot
CoinSpot is an Australian digital currency exchange platform. Through CoinSpot, Australians have access to over 100 digital currencies including Bitcoin, Ethereum and Litecoin. Users can access the platform by creating a CoinSpot account with their email, password, and a photo of the front and back of a valid Australian driver’s licence.
Discover more FinTech movers and shakers in our article on 5 Aussie fintechs working to change how to invest.