MY DATA, YOUR MONEY: LET’S RE-INVENT FINANCE

Lately at Pollenizer, we’ve been thinking a lot about eXponential Organisations and how to help with rapid societal change. Last night, we launched an event focused on the future of money called Free | Money, sponsored by ASX500 lender Pepper Money.

Here’s 10 things we learned about the finance sector and the future of money during the event:

1. Australia’s finance sector is huge. It’s our fastest growing industry yet contributes only a fraction to export. In FY2015. the industry managed $2.6 trillion in assets, employed 451,000 people (of whom 52% are women), and $141 billion in sales which “…exceeded all mining activities by $532 million, manufacturing by more than $40 billion and healthcare and social assistance by more than $35 billion.” Wow.
2. It’s still stuck in 1817. Arguably Australia’s most reviled industry for how it makes us all feel when we deal with it. Last night, several speakers discussed the issues many Australians deal with from applying for a loan to managing their finances caused by the industry’s antiquated processes and products. For example, in New Zealand you can buy a home and the whole settlement process can take place online. Yes, there are regulatory barriers but these can be and will be removed.
3. Startups are increasingly welcomed by regulators. Things are changing – e.g. ASIC (Australian Securities and Investment Commission) has formed an Innovation Hub to help financial startups navigate through regulations, and proposed a regulatory “Sandbox” for new financial services companies to run innovative experiments.
4. During GFC, financial organisations who worked closely with debtors, were more likely to survive. A good “defensive” lesson for dealing with customers: if they are struggling to pay you – get in there and help them. If you don’t, your asset turns into a liability. Struggling businesses who weather the storm come back bigger, so more business for you – so ultimately, it pays off.
5. Big partners are critical to scale business models and attract investors. While the startup bootstrap mantra is all about disruption and going it alone, it can be extremely difficult. Big companies are increasingly seeking exposure in startup innovation. They are offering access to big platforms and scale distribution typical startups do not have access to – whether it’s highly-engaged customers, strategic partners or global reach.
6. Our financial data belongs to us – but we don’t know it. Very few people understand their credit score, or how it affects their ability to access and use debt. When asked if they knew their credit score, only about 10% of the room put their hand up – and this was in an event about finance! For example, our spending habits are recording every day via our credit or debit card – how do we leverage this information and say.. get a better credit card rate? Pay less interest on our mortgage?
7. Banks have our data – but don’t do anything with it. Whoever can help us collateralize our transaction data – turn all that history of transactions into a better credit score that we can then ‘put out to tender’ to financial lenders and/or services companies – could transform finance. Don’t make us fill out 50 page forms… use our data and do all the leg work for us. Personalisation has to go beyond marketing and different coloured credit cards – it should really impact the products we can use and access.
8. What consumers and businesses think of as “value” is complex, and changing. As well as the best rate, consumers and businesses also want convenience (“help me in this situation fast”), provenance (“this money did not come from a bad place”), values (“you’re going to reward me for doing good”), compassion (“we all have mishaps in life, we’re here to help”), yes we believe in climate change (“here’s a discounted loan for solar panels”). More generally, this is the next level-up for the service economy – how and why you solve problems is becoming as important as what you do to solve them.
9. “FinTech” is so 2015. While investment into FinTech startups is high, skepticism is growing that so-called ‘TechFins’ only provide new ‘features’ for existing finance companies, not real transformative change. Expect increased discrimination over whether a startup is the next unicorn in finance services, or actually just a new button coming soon to your bank’s webpage.
10. Breakthrough ideas will come from Startups. Speakers from the financial sector argued that the conformity and compliance mindset of banks and finance companies means its unlikely that real innovation can emerge from within, and instead they are betting (literally) on startups.

As I wrote in an earlier post, the industry is so ripe for disruption. Scads of data, disgruntled customers and businesses wanting better price discovery, simpler applications, more flexible terms, we all want finance to get on board with 2017 to help us more. Props to our partners in this endeavour Pepper Money who are taking a strong stance on re-inventing the industry.