Beyond ‘us vs them’: How Aussie fintechs can get a foot in the door at the big banks

Toby Norton-Smith, managing director of CommBank’s venture scaling arm x15 Ventures. Source: supplied.

Australia’s fintech sector is buzzier than ever, and it’s easy to be drawn into a rhetoric of old vs new; incumbent vs challenger; cumbersome vs nimble; big bank vs startup.

In some cases, that’s the reality of it. But according to Toby Norton-Smith, managing director of CommBank’s venture scaling arm x15 Ventures, it’s by no means the be-all and end-all.

Speaking to SmartCompany, Norton-Smith lays out x15’s broad investment mandate. It can use its coffers to acquire startups or invest a minority stake, he says. Or, it can build whole new ventures.

Either way, it’s intended to scale those businesses, using the assets and leverage of the big-four bank.

The x15 model is all about collaboration and integration. It’s about unearthing new tech that could benefit the bank, and allowing it to grow and flourish without being held back by the incumbent machine. And x15’s new xStack platform allows for incorporation of the legislative framework as the startup grows, meaning — in theory — it can be seamlessly plugged into the bank when it’s ready.

While some fintechs position themselves as disrupters to the big four, and rightly so, it doesn’t always work that way, Norton-Smith explains.

“When people think about fintech they think about consumer-facing models,” he says.

“There is at least as much opportunity in serving banks or working with banks as third parties to help them address those challenges.”

And if a tool works for one big bank, chances are it will work for the others too.

“Some of that could be very, very exciting for fintechs and regtechs.”

That’s not to say a little competition is a bad thing, he stresses. There’s no harm in being kept on your toes, both in terms of new local players and global tech trends.

But there’s a “growing realisation” that in some cases collaboration could be the way forward for fintech.

Norton-Smith isn’t the only one who feels this way. A panel at FinTech Australia’s Intersekt conference last week unpacked what makes a successful partnership between innovators and incumbents.

Case in point was Look Who’s Charging, a fintech designed to demystify bank statement data, delivering an API to financial institutions to help consumers keep track of where they’re spending their money.

Speaking on the panel, co-founder David Washbrook explained that as well as solving a problem for the consumer, the startup solves the problem of what he called “friendly fraud” for the bank.

If customers don’t recognise the listings on their statements, they end up cancelling cards unnecessarily, he said.

That’s an expensive problem for banks, and one that “sucks up a lot of resources”.

Back in 2017, Look Who’s Charging secured NAB as its first client. Now it has about 20 institutions on board.

So, if you’re a scrappy startup looking to get on the radar of the big four (and more), where should you start?

Justin Brown, product owner for digital innovation at ANZ, Look Who’s Charging co-founder David Washbrook and NAB head of digital enablement Emily Nicholas, speaking on a panel at Interseky 2021. Source: Bake Agency.

Simplicity, problem solving and perseverance

Also speaking at Intersekt, NAB head of digital enablement Emily Nicholas said first and foremost she and her team are looking for tech that’s “solving a clear customer pain point”.

You should be clear as to how exactly the tech adds value to the core business of the bank — that is, lending money, taking deposits and moving money, she explained. Any fintech has to have “a value add to our core proposition,” she explained.

“We’re not a data enrichment business. We’re a financial service.”

But, she also advises startup founders to do everything they can to “de-risk” themselves. Banks deal with a lot of partners in order to minimise their risk as much as possible, she notes.

“If you can have a good answer to the risk you could present as a potential partner to the bank, then you’re on the front foot already.”

Justin Brown, Intersekt panellist and product owner for digital innovation at ANZ, said it can be helpful for fintechs to make their tech as easy to integrate as possible. Equally, he suggested starting small.

Radical new tech can be daunting when you’re operating in a highly regulated area. If you offer something small and simple first, that’s more likely to get across the line. Then you can build out from there.

Finally, Washbrook himself noted the importance of having a simple, quick and easy to understand elevator pitch.

It’s easy to describe what Look Who’s Charging does and why it’s beneficial to the bank. The product is also very visual, which helps, too.

The trick is “keeping things simple and being able to articulate it clearly”, Washbrook explained.

“Senior executives are busy people.”

Second, he advised founders to “keep knocking on the door.”

“It will eventually open.”

Banks can have headcounts of 30,000 to 40,000, he said. It might take a while to find the right person, who your tech resonates with.

He recalls one instance where Look Who’s Charging was told ‘no’ by about 80 stakeholders within a bank, including the chief executive. Over three-and-a-half years the team kept trying, and eventually got its foot in the door.

“If you’ve got a proven business, have the confidence; have the perseverance,” he said.

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