She may now have a string of accolades as a leader in financial technology — think top 100 women in fintech, Forbes 30 Under 30 and top 200 fintech influencers — but Airwallex co-founder and president Lucy Liu didn’t strictly set out to build an Aussie fintech unicorn.
In fact, she says she only really became aware of the whole ‘fintech’ concept shortly before she started the business, along with co-founders and uni classmates Jack Zhang, Max Li and Xijing Dai, back in 2015.
Once the team started working on Airwallex, however, “fairly quickly, we realised there’s a term called fintech”, she tells SmartCompany.
Now, the founding team is heading up one of Australia’s most successful startups. By 2019, Airwallex was a unicorn, with a valuation of more than $1 billion.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
In April this year, it raised another $250 million, boosting its valuation to $2.85 billion, despite the COVID-19 crisis.
A lot has changed in the past five years — but not just for Airwallex and its founders. There’s also been a shift in the fintech world as a whole.
“There was a lot of discussions and debate around whether you should be a ‘techfin’ company or whether you should be a ‘fintech’ company,” Liu recalls.
“Should you put technology first or should you put finance first?
“I think that’s just going into the technicalities of how you position yourself. It’s not so much to do with what problem you’re solving or what you’re actually doing.”
Some of the early online payments platforms, for example, were not necessarily focused on the product they were offering, or even on the tech, Liu explains.
They were simply taking existing offline services and bringing them online.
“Five or six years ago it was more about digitisation of financial services,” she says.
Sure, that can improve access to finance, but it’s not much of an improvement on “the actual underlying infrastructure”, she adds.
“It is not really improving the user experience.”
Over the past few years, however, that has started to change, she says. Fintech startups all over the world are changing the way consumers interact with financial products and access financial services.
“As an industry, we are moving from only digitisation to actually thinking about how we can solve financial problems with technology,” Liu says.
“The world is changing,” she adds.
Airwallex operates in the B2B space, and within that, new business models are emerging, and existing models are changing. The startup has to be ready to meet the needs of these clients, Liu says.
“If you’re only moving what they’re used to from offline to online, you’re not really integrating with their business model itself, and not moving forward with being innovative about how you actually solve the problems,” she explains.
That’s where the ‘tech’ part of fintech comes into play.
“It’s about ability to scale, it’s about accuracy, it’s about efficiency,” she says.
“Those are the things we should focus on as a technology company.”
Where ‘fin’ meets ‘tech’
Liu herself doesn’t come from a technical background, having started her career in equities trading and the capital markets.
But, “that part of the world is more and more tech-driven these days,” she says.
It’s here that she became interested in the intersection between financial services and technology, and realised just how important that was.
She saw her banking employers hiring people with backgrounds in maths and physics, who were good with numbers, as well as software engineers to build the algorithms that would make the trades.
“Obviously, they would be more efficient,” she notes.
“But when everybody is doing that, the opportunities become very slim, because everyone is very efficient. Then it comes back to whose algorithm is doing it better,” she adds.
“How can you actually avoid merging technology with everything we do these days? That’s what’s very interesting to me,” Liu says.
That said, before building Airwallex, Liu had little to no interaction with the tech side of finance.
In fact, when she started working with software engineers, it took her a few days to get clued up on the programming language and systems they were using.
“It’s actually very tricky,” she laughs.
“It’s not normal English, right?
“For me, it’s just code on a screen, but actually it covers the entire engine.”
Similarly, however, it would be easy for some of the engineers to be writing code and building products without fully understanding the business side of Airwallex, or what their work translates to in terms of value for the customer.
She’s often translating between the two worlds, updating the engineering team to explain how an error in the code can affect transactions to the tune of millions of dollars for customers.
“But, a really good product can also save millions in operational cost and can actually lower the risk,” she says.
“Everything we do from technology and finance is actually interconnected.”
Liu admits she still doesn’t know everything there is to know about the technology behind Airwallex. It’s a fast-paced environment, and programming tools and languages change all the time. But that’s not a bad thing.
“Sometimes not knowing the tech side is actually for me a better way of thinking from a customer’s perspective,” she says.
“They don’t know anything about what goes on behind the scenes,” she notes.
All that matters to the customer is that the product works — that it’s easy to use, fast and efficient, she explains. That’s what makes an effective fintech.
“It’s building up things, and then simplifying them to something that everyone would be able to understand.”
Fintech enabling fintech
Now, as the COVID-19 crisis continues, the fintech ecosystem is operating — like everything else — against a different backdrop.
It’s an ongoing health crisis, but it has also bought economies all over the world to a halt. Of course, Australia has found itself in its first recession of more than 30 years.
We’ve heard much discussion about the role startups will play in the economic recovery post-pandemic. But when asked what role fintech startups will have, Liu notes that ‘fintech’ is a particularly broad term.
It’s not that this particular breed of startups will serve to boost the economy, she says. Rather, fintech will play a part in the growth of every business going forward.
“As a trend, fintechs are becoming more and more of an essential part of any business and consumers’ lives.”
She draws a comparison to the move from private servers to the cloud.
“Everything is on the cloud,” she says.
“Fintech is almost like the new cloud. It’s everywhere.”
Airwallex was built to enable a digital economy, Liu explains. It can help clients expand their markets without having to open multiple offices and bank accounts, and without having to deal with various barriers to entry.
And, perhaps ironically, many businesses the startup is working with are using the lockdown period to expand into new markets. When you can’t travel, the domestic market starts to look pretty small, she says.
“It’s actually good timing for them to think about other markets and not be so busy with their current product or customer base.”
This is just one example of a growth strategy that requires fintech integration. The onus shouldn’t be on a small business to build a new PayPal, or their own international payments gateway.
“It’s enabling them to be a fintech themselves,” Liu says.
“Non-financial services companies all, at the end of the day, need a fintech integration to help them,” she adds.
“You can’t actually think about these problems in isolation.”
It’s not one sector or solution that will enable economic recovery. It’s connections between different players in the Australian market, Liu suggests.
“The role that fintechs play, and that Airwallex plays, is being that connection point.”