4 top FinTechs disrupting financial services in Australia!

By Edil Corneille

Banks all over the globe are upgrading their systems to include digital channel offerings and modern platforms. There are independent financial technology companies, also known as FinTechs, who are looking at solving customers’ finance problems by changing the existing rules of the game. FinTechs use emerging technologies to transform financial processes and offer customers an alternative solution to the traditional banking solutions available in the market. In doing so, they have impacted lending, payments, investing, trading, among others.

According to the latest KPMG Pulse of FinTech report, a fall in M&A and PE activity caused total investment in Australian FinTech to fall from US$1.3 billion in the first half of 2019 to US$548 million this year. However, the financial technology sector has experienced significant growth in recent years, as reported by Statista, and there has been a five-fold increase in the number of FinTechs in five years. Statista has also mentioned that wealth and investment, and lending, are the most developed subsectors in terms of the number of businesses. Below is the list of companies that are enabling innovations and disrupting financial services in the country.

Frollo

This North Sydney-based open banking solutions provider partners with financial institutions to help them innovate, build out their feature set and quickly take new features to market through its API enabled platform. Frollo’s platforms are leveraging open banking data. Frollo has been selected as one of 10 companies currently working on the Government Open Banking Pilot and GDR compliance.

Frollo was acquired by lending technology company NextGen.Net in July. The strategic acquisition transpired to help both companies lead the way in Australia’s open banking environment.

The company’s SaaS integration platform, the core of Frollo’s ecosystem brings together its AI engine, APIs, partner integrations and open banking solutions. Frollo’s white label PFM solution can equip its clients’ customers with financial wellbeing tools. Data holders can comply with the Product Reference Data portal of the company for open banking. Frollo and NextGen.Net published ‘The State of Open Banking in Australia’ report this month.

Judo Bank

In May, the neobank announced the raise of $230 million in fresh equity, thereby valuing it to push through $1 billion and indicating the support of investors even amid the COVID-19 pandemic. The unicorn has been co-founded by David Hornery and Joseph Healy. Judo Bank is an SME challenger bank purposefully built to make it easier for Australian businesses to get funding.

The neobank provides business lending solutions starting from $250,000 for small to medium-sized businesses. Its team of experienced business bankers are currently located in Melbourne, Sydney, Brisbane and Perth.

In October, the bank announced that it will implement Wilmington-based nCino’s Bank Operating System. The solution will streamline the challenger bank’s lending operations and is expected to further enhance its client value proposition.

Spaceship

Founded in 2016, Spaceship is an online investment platform for younger Australians. It announced a capital raise of $10 million in August. Shareholders were invited to participate via a convertible note rights issue, which was fully subscribed. Spaceship apprised that following the raise, it attracted more than $50 million of funding.

The platform has now surpassed an important milestone as millennial Australians do more with their money during the COVID-19 pandemic. Over 100,000 Australians now invest with the Spaceship platform. 40,000 individuals have joined since COVID-19 hit the Australian economy.

Spaceship is backed by Mike and Annie Cannon-Brookes’ Grok Ventures and AirTree Ventures. It mentioned that it is consistently attracting up to 300 customers each day. Funds under management (FUM) in Spaceship’s investment and superannuation products has now surpassed $530 million, an increase of $110 million since July 31, 2020.

Xinja

The FinTech-based neobank is a 100 per cent digital where Australians can set up an account in seconds with zero paperwork. Xinja has set a target of July 2021 for it to make customers’ data available, via API and according to open banking standards at the request of the customer, to third parties who are accredited ‘recipients’. This will result in the end customer getting customised and improved financial services.

The bank partnered with San Francisco-based Kong, a cloud connectivity company, to deploy Kong Enterprise to power its microservices-driven mobile banking platform.

Xinja’s bank account is covered by the Government guarantee to keep the money of customers safe. The bank has joined forces with SISS Data Services to create a new open banking solution and to meet the October deadline to comply with the first phase of the new Consumer Data Rights (CDR) regulations in Australia.