FinTech: finding wood in the forest

Beverley Head

The rapidly growing forest of FinTechs has meant it is now getting much harder to spot the wood for the trees.

FinTech Australia this week launched its 2016 census of the sector which should provide more insight as to how many local startups identify as FinTechs. But individuals and enterprises aren’t waiting for the latest tally.

To help Australian consumers navigate the options available to them financial product research company, Canstar recently launched WealthBricks which it describes as an “online supermarket” featuring a range of services from around 27 local FinTechs with another 20 in the wings.

According to Canstar general manager Josh Callaghan, the single biggest challenge that the FinTechs have is distribution – getting their service out into the market and used. He said that when Canstar had analysed the users of its site, which provides access to around 500 different financial products for comparison purposes, it found that a high proportion of its users had self-managed superannuation funds, or different financial investments, and were keen to learn about the services FinTechs might offer, such as robo advice.

Canstar performs a limited degree of due diligence about the FinTechs and their services before providing access to the site, and all the services have to be available in Australia to Australian consumers before they are featured.

The challenge for enterprises in sorting through the FinTechs is even more acute. FinTechs could either be the business that disrupts an established business, opens a fresh opportunity in an adjacent market, or offers a technology that could inject fresh efficiencies into an existing business. And they might not be domiciled in Australia.

Serial entrepreneur Simon Burke has founded a business called ScoutTech to help enterprises navigate the global forest of FinTechs and other startup disruptors.

A former consultant, then founder of IPscape, Mr Burke has been acting as a mentor to a handful to start up companies working at hubs such as Stone&Chalk, Muru-D, Tankstream Ventures and Tyro FinTech. “That really led me into world of technology scouting,” he said.

Borrowing a leaf from Silicon Valley where technology scouts hunt down the next big thing for venture capitalists, Mr Burke flipped the notion, and sees his role as delivering the link between corporates and startups.

Enterprise leaders he said were curious about incubators, the companies they spawned and the disruption they threatened.

“I found myself being asked by C level executives ‘what does this technology wave mean for my business – what tech is real, what’s fluff and what are the implications for my business’,” said Mr Burke, whose business card describes him as chief technology scout.

One of the startups that he has mentored is LoanDolphin, an online platform that lets people input their details, allowing banks and mortgage originators to respond with their best offers.

It is, said Mr Burke, an entirely new model, but had led to established mortgage lenders asking him to explain what was real, and what was hype in the sector, and was anyone, anywhere in the world really getting a mortgage from their smartphone?”

While many organisations can get a sense of which technologies might impact their business by studying Gartner’s hype cycles and magic quadrants, the latter do tend to concentrate on established rather than startup businesses.

That’s where Mr Burke comes in. “Traditionally a technology scout brings deals to venture capitalists – the traditional definition is something that’s been in Silicon Valley for a long time. I’m not doing that – this is the opposite – advising companies on the technologies they need.

“It’s not a four week consulting model – [it’s] a 12 months process where you have to understand the strategy and the business model of the company. You work out the as-is technology model, then set out what is happening around the world.” One of the key issues he says is to understand the risk appetite of the business and the board, which will influence an enterprise’s ability to leverage new technology.

“Probably the biggest challenge to a company doing anything about new technology is its culture, is its DNA,” said Mr Burke. And its leadership.

Having worked with the Venture arm of British Telecom, BT Ventures, Mr Burke believes also that leadership often limits the impact of corporate venture capital initiatives, which he said “often last as long as the CEO.It’s always a major risk in any corporate venturing; there is always a chance that the board decide at some point this is not for us, not our core business.”

He says that even seemingly well-established operations such as Telstra Ventures, Westpac’s ReInventure and the like, are at some stage likely “to change with the CEO or business cycle.”

Instead of relying on their venture arms to pick winners, Mr Burke’s business model is that he picks them on their behalf.

While it’s early days, Mr Burke is already working out how to scale the business. He is building a network of research analysts through his business school network that scour the world for important innovations and is looking to build a team of experts in different innovation verticals.

“It’s really about identifying the technologies that matter and shortlist them. My experience as a technologist is to say ‘these are real, these have critical mass’ and then make a recommendation – act, watch or ignore,” with clients receiving monthly reports. While the business is new he has five paying clients for the service in the mortgage, business process outsourcing and educational technology areas.

Bringing enterprises and innovators together is also a priority for Stone&Chalk CEO Alex Scandurra – but he limits his matchmaking to the 90 or so startups on the incubator’s books. Mr Burke doesn’t have those limits and can scour the planet for the best tech fits.

Do you know more? Contact James Riley via Email.

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