ASX-listed fintech zipMoney raises $40 million from Westpac: Are the big four banks ready to embrace startups in the sector?


Zip Co co-founder Larry Diamond. Source: Supplied.

Sydney-based payments platform zipMoney has secured $40 million in investment from Westpac in a move that signals a readiness for the big four Australian banks to embrace fintech startups, according to zipMoney co-founder and chief Larry Diamond and banking industry analyst Neil Slonim.

ZipMoney listed on the Australian Securities Exchange in 2015, raising $5 million through a reverse takeover of Rubianna Resources to boost the market share of its payment services, which include online consumer financing through point-of-sale credit and digital payments.

Westpac’s $40 million investment, which includes an additional $8 million in performance-dependent future funding, takes the amount invested in zipMoney from two of Australia’s largest banks to $300 million this year, after the fintech also secured a $260 million funding deal with National Australia Bank in May.

This raise adds to the $20 million in funding zipMoney secured in June last year, and the $100 million in funding it secured in late 2015. The platform has recorded revenue of $17 million so far this year, as of the end July, and is now serving upwards of 3000 customers per day, according to Diamond.

With this latest funding injection Diamond told StartupSmart he sees a “wonderful opportunity in the market right now” to expand the startup’s reach through offering greater range of products and services to consumers. This means “tripling down” on hiring data scientists, engineers and analysts to drive its underwriting, data segmentation, data and risk teams. 

Diamond says zipMoney will also use the funds to focus on research and development, consolidating the acceptance of the ‘Zip’ digital payment platform and further improving the user experience of zipMoney’s current offerings. 

The Westpac deal is part of a broader “strategic relationship” between zipMoney and Westpac, which the companies say will involve “explor[ing] the integration of Zip’s products and services across Westpac’s network throughout Australia”.

Diamond says the investment represents a “coming of age for fintech here in Australia”, a market that he intends to continue to focus on in the future. 

“We want to stay super focused on Australia and New Zealand — something that will keep us busy in the next 10 years,” Diamond tells StartupSmart. 

This investment adds to the rapidly growing list of fintech deals being secured in Australia, which was found to be a leading market in non-core fintech investment deals in the last financial year, thanks to significant deals such as Prospa’s $25 million AirTree Ventures-led raise in February.

Diamond welcomes investment from the seemingly growing interest in fintech operators from the big banks, noting that “the size of the [Australian fintech] pie is big enough” for both startups and banks to exist in the financial sector.

“Banks are sitting on wonderful infrastructure that fintech companies can use to turbo charge their growth,” he says.

Diamond says fintech startups can offer crucial innovation and value to bank customers, noting that as the fintech sector grows, “banks are realising they may not have all the answers,” when it comes to offering the best value propositions to consumers.

“For Westpac to do this is a huge statement from them to say, ‘we are happy to back fintech [in Australia]’,” Diamond says.

The next phase of fintech deals

Neil Slonim, an independent banking industry commentator and founder of, says Australia’s largest banking institutions have been getting increasingly involved in the fintech sector for some time and Westpac’s direct investment in zipMoney is just the next phase.

Slonim points to Westpac’s partnership with Prospa, which was a “referral arrangement” deal, as an example of Westpac “dipping a toe” in the fintech pool, and then evidences Westpac’s indirect investment in fintech startups through its venture capital firm Reinventure as the next step in the bank becoming more involved in the fintech scene.

By taking a stake in zipMoney through this latest investment, Slonim says Westpac is entering the “next phase in the progression of banks embracing fintech businesses”, a phase that Slonim believes will eventually lead to banks taking a “100% stake” in fintech startups.

“This is the next phase in the progression of big four banks coming to grips with the impact of fintech businesses on traditional banking markets,” Slonim tells StartupSmart.

“There’s no doubt that they will continue [to invest] in traditional areas of lending, and also payments” he says.  

Slonim believes that banks will be monitoring and engaging with Australian fintech startups closely, both now and in the future.

“The reality is that the big four banks are watching the space very closely — they’re doing more than watching, they are following it, engaging with it, talking to people constantly,” he says, noting that there’s a “dance going on at the moment between banks and fintech lenders”.

Slonim explains that while some fintech startups seek to partner with banks because it “offers them access to a significant critical mass” of customers, other fintech startups want to be independent of banks to avoid a “compromise” of their values.  

The progression of banks aligning themselves with fintech businesses may have also have a positive flow-on effect for the integrity of Australia’s financial sector, a goal which Slonim believes the Australian government should support startups in achieving.

“Governments, politicians and regulators would do better spending more time on making it easier for new [fintech] competitors to enter the market rather than [trying] to get the big four banks to change the way they do business,” he says. 

“The best way to get the banks to change would be to have genuine competition in emerging businesses that starts to eat in to the [bank’s] market share of revenue and profits,” Slonim says, adding that “market forces are more likely to get the banks to change than regulators and politicians conducting inquiries and royal commissions”.

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