Stone & Chalk’s Marie-Anne Lampotang talks to Jayson Forrest about the transformation of financial services, which is being spearheaded by fintech innovation.
There’s been a lot of talk recently about financial technology – or ‘fintech’ as it’s more commonly known. Buzzwords like ‘artificial intelligence’, ‘bitcoin’ and ‘blockchain’ seem to make the media headlines on a daily basis.
Today, fintech impacts the entire financial services value chain; from front-office to back-office, wealth management and superannuation, retail banking, credit and debit.
In fact, technological innovation is all pervading – not only on business but in the lives of all Australians. And for businesses to thrive and survive in tomorrow’s future, technology will be key.
It’s a view supported by Marie-Anne Lampotang, the General Manager – Sydney at Stone & Chalk – an independent, not-for-profit innovation hub that helps foster and accelerate the development of fintech start-ups.
“There’s so much more to fintech than first meets the eye,” Marie-Anne says. “Fintech is a movement to bring transformation to financial services, by applying new and emerging technologies to address consumer needs. It involves anything from client-facing activities to the back-office operations that affect the delivery of a financial product or service.”
And when it comes to talking about fintech, Marie-Anne knows a thing or two. She brings considerable depth of experience and knowledge of the superannuation and wealth industries to her role at Stone & Chalk.
“It’s exciting to leverage my 20 years in financial and professional services to help fintech start-ups grow from small businesses to global leaders.”
Friend or foe?
While Marie-Anne agrees there are some fintech businesses that are competitors to traditional financial services companies, on the whole, she doesn’t believe fintechs are a huge threat to the wider financial services sector.
“Through their platform offering, Hub24 and Netwealth are good examples of competitors and disruptors to traditional financial services organisations, but not every fintech is disrupting financial services incumbents.
“In fact, most fintech start-ups are actually enablers to the incumbents, providing them with the necessary products and solutions to help them with their technology transformation.
“And while some fintech companies are going directly to consumers with their offering, like selling loans, I think the general fear factor emanating from within the industry that every fintech is out to get them, is unwarranted.”
In fact, Marie-Anne is particularly excited by the opportunities fintech solutions can provide to the established financial services industry.
“Firstly, fintech is helping with the transformation of financial services,” she says. “There are a lot of fintech solutions for the back-office that planners can use to digitise their operations and make data collection, as well as the preparation of SOAs, more efficient. This is not something to be fearful of, but if planners don’t embrace this type of technology, they will be left behind.”
She says this includes the much criticised robo advice offerings.
“Some traditional financial planning businesses might see automated advice offerings as being competitors, but most of these offerings are not targeting the typical clients of planners,” she says.
“If you think about the type of clients that financial planners want, they tend to be relatively affluent people. Instead, robo advice offerings are targeting other groups of people who wouldn’t traditionally be able to afford professional advice or are not ready to seek the help of a professional.”
Instead, Marie-Anne believes affordable advice solutions, like robo advice, might actually be a future pipeline for people requiring the services of a planner.
“So, I see these types of fintech solutions as an opportunity, rather than a threat to the industry.”
Watch this space
When you ask Marie-Anne to pinpoint the trends she’s most excited about in the fintech space, she finds it a challenging request. However, when pressed, she identifies artificial intelligence, open banking and blockchain technology as being three areas to watch.
“The use of artificial intelligence and machine learning is revolutionising financial services in areas like ‘chatbots’, which is hugely exciting,” she says. “I also see ‘open banking’ as a massive opportunity for other competitors to join the marketplace.”
Open banking, which will begin on 1 July 2019, is a fintech initiative that will enable financial institutions to exchange data with each other. Essentially, open banking provides consumers with greater control of their own data that banks and other financial institutions hold on them.
“Currently, it’s difficult for people to access their full financial data, and for banks and other financial institutions to send that data to each other. This makes it costly, difficult and time-consuming for consumers to find the best product or service for them, and also to switch products and services,” Marie-Anne says.
“Instead, open banking will allow consumers to direct their data to be sent to other banks, financial institutions and authorised organisations when they want to. The consumer controls who holds their data and how it’s used.”
According to Marie-Anne, open banking will allow consumers to have better access to their data, enabling them to make more informed choices about the financial products and services that are right for them.
“This should also drive competition within the financial services sector, promoting innovation and allowing new and improved products and services to be developed.”
The third trend Marie-Anne identifies is blockchain technology.
Blockchain was originally developed as the accounting method for the virtual currency, Bitcoin. Put simply, blockchain is a public ledger where transactions are recorded and confirmed anonymously. It’s a record of events that is shared between many parties, and importantly, once information is entered, it cannot be altered.
Today, blockchains – which use what’s known as distributed ledger technology – are appearing in a variety of commercial applications. The technology is primarily used to verify transactions within digital currencies, although it’s possible to digitise, code and insert practically any document into the blockchain. Doing so creates a permanent record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain, instead of a single centralised authority.
The right solution
With the diverse range of fintech solutions popping up in the market, sorting the wheat from the chaff can be difficult. So, how can planners identify the right type of solutions for their businesses?
“It’s a good question,” says Marie-Anne. “If a planner wants to know what’s happening in the wider innovation space, I recommend they attend events and conferences, where a lot of information is disseminated and shared. They should also subscribe to fintech newsletters - the ecosystem is prolific, with start-ups looking to share what they are doing, so they are always in the industry press.”
But what if the planner or business is not particularly tech savvy? In this instance, what should the planner be considering when appraising a potential fintech solution for their business?
“It all comes down to the type of problem they are trying to solve,” says Marie-Anne. “Usually, it’s an exisiting problem they are trying to find an innovative way of solving. So, it’s all about identifying the problem and finding the right solution for that problem.”
Marie-Anne believes one of the best ways of finding that solution is by partnering with Stone & Chalk to run an innovation program.
“At Stone & Chalk, we have the privilege of working with large organisations to help solve their real business problems. And we are finding an increasing appetite for these larger organisations to bring innovation inside their business by working with start-ups. Problems are often solved more quickly and cost-effectively than they would otherwise be in-house, when you’re battling internal processes and approval stage gates.
“These are probably the best places to start,” she says. “Given the size and sophistication of our super industry, there are solutions here in Australia that can solve some of the problems of the wealth sector.”
In fact, Stone & Chalk is privy to many fintech start-ups, but the types of companies it chooses to work with depends on a strict vetting process. This begins with an application process to ensure the company is at a particular stage of development that Stone & Chalk can put it in front of potential clients.
“So, we don’t tend to take early stage start-ups. Instead, we work with start-ups that have already developed a product or are at the testing stage of that product.
“The value proposition we offer to these business-to-business start-ups is to help them grow and commercialise their offering. And we can offer them exposure to our 27 partners that we have an ongoing relationship with, which can potentially become clients for them.”
Two examples of companies that have made good use of Stone & Chalk’s innovation hub are Map My Plan and QuietGrowth.
Map My Plan (mapmyplan.com.au) is a website that provides consumers with the necessary tools to formulate their own financial plan, based on where they are now and where they want to get to.
“This website its targeted to the person who probably isn’t ready yet for a planner. But as more people become comfortable with the financial planning process and aware of the importance of planning for their future financial wellbeing, this website will probably become a great source of leads for planners.”
Another company Marie-Anne points to is QuietGrowth (quietgrowth.com.au) – a robo advice platform that offers users a low fee, automated, online investment management service for optimised returns.
Threats on the horizon
In recent years, there has been an increasing number of fintechs taking root in Australia, with a number of non-bank lenders entering the market and beginning to gain scale. Examples include: Prospa, SocietyOne, RateSetter, Moula, Spotcap and MoneyPlace – the latter three are either alumni or current residents of Stone & Chalk.
Whilst none of these fintechs have yet supplanted a major bank, they are certainly increasing the size of the SME and consumer market, providing these markets with a source of affordable finance that is approved in a matter of days or, in many cases, hours. In the case of SMEs, that’s something that many of the larger institutions are still far from being able to do.
However, Marie-Anne believes these types of fintechs are the innovation tonic the financial services industry needs, accelerating the transformation of the industry by applying new and emerging technologies to address consumer needs.
And while there is a lot to be excited about with the constant development of innovative fintech solutions, Marie-Anne concedes that government regulation is a constant threat facing this burgeoning sector.
“We operate in a heavily regulated environment, so this is a constant challenge for companies operating in the fintech space,” she says.
“Unlike the big banks that have the resources available to respond to changes in regulation, fintech companies are much smaller and face greater challenges responding to Government regulation.”
However, that said, Marie-Anne doesn’t actually foresee any major regulatory change on the horizon for fintechs, although there will continue to be ongoing scrutiny of payday lenders. Instead, she believes the findings from the Hayne Royal Commission will provide more upside than downside for fintech providers.
“The Royal Commission is a gift to fintechs,”she says. “It has highlighted failures in some of the larger organisations; failure in terms of operating systems and processes, which has created the level of distrust we are now seeing in them by the wider Australian population.
“This has created a massive opportunity for companies in the business-to-business space, enabling them to take their services to the big banks and financial services companies to help them better streamline their businesses.
“This has also provided significant opportunities for companies operating in the business-to-consumer space. So, if you’re thinking of creating a fintech company, now is a great time to be doing it.”
Marie-Anne Lampotang was the Master of Ceremonies at IMAP’s InvestTech 2018.
