Although some fintech start-ups in Australia are purely disruptors, which directly market to individual consumers, most work to collaborate with established financial-service firms.
The founder of neobank start-up Douugh, Andy Taylor, said the royal commission had stopped short of pushing for the kind of reform needed to ensure banks served their customers’ financial wellbeing.
“I personally believe the wrong way for fintechs to capitalise on this opportunity is to build solutions for banks rather than customers,” he said.
Despite the structural flaws in the banking business exposed by the commission report, collaborative players said they continued to see opportunities in partnering with the established banks.
Data management firm Ansarada chief executive Sam Riley said, for example, there would be a role for fintech in identifying market and business risks early, “enabling challenges to be addressed internally before they mature”.
Industry experts also said fintech firms that had built their businesses by specialising in specific financial services needed to maintain internal accountability as they scaled up.
Mr Tsen said the high-level value proposition of the fintech industry was to “unbundle the banks”. The royal commission had showed that “advisers in financial services had served a lot of different masters”, he said.
Although it was unlikely that fintech firms would expand across services in the manner of banks, start-ups had to focus on aligning internal incentives with consumer welfare, he said.
Lastly, experts said the royal commission had not gone far enough in recommending competition measures long favoured by the fintech industry. This left ongoing battles over open banking regulations, for example, up for further contestation.
The chief executive of peer-to-peer lending platform RateSetter Australia, Daniel Foggo, said the impact of the commission report was clouded by its lack of clarity on the key question of responsible lending.
“Commissioner Hayne tells us that consumers can’t be trusted to tell us information about their own financial affairs, whilst he also commends banks for recent initiatives to collect additional income and expense information from loan applicants,” Mr Foggo said.
“Whilst valuable, the report and its recommendations are backward looking,” he said.