KPMG: Australian banks leading on fintech innovation
Fintech is still a challenge for our banks but they have fared better than their global peers.
A new report from KPMG has found that Australian banks are ahead of global financial institutions on fintech engagement, collaboration and innovation. The report, Forging the future: Embracing fintech to evolve and grow, surveyed 168 financial institutions from 36 countries and found just 47% had a clear strategy in place to deal with fintech. This is compared to 67% of Australian respondents which include four of Australia's top five banks.
“When it comes to embracing disruption to the sector, Australian financial institutions are up there with the leading players,” said Ian Pollari, KPMG Australia’s head of banking and global co-lead for fintech.
“Arguably, taken as a whole, the Australian financial services market has been quicker to adapt to disruption and technology trends. Every Australian respondent to our survey already had a dedicated fintech team in place and had developed frameworks to vet fintechs approaching their organisation.”
While there has been some hesitation from banks to open their doors to fintechs in the past, there have been some notable leaps forward as of late. Macquarie Bank has established its open banking platform to allow third-party fintechs to connect and customers to securely share their data; CommBank has made partnerships with several fintech players and set up an innovation lab; and Westpac has made several high-profile investments through its Reinventure fund as well as on its own.
Jonathan Davey, executive GM Digital and Innovation at NAB said the bank has already established strong partnerships with the likes of REA and Xero.
"It’s critically important for banks to shift their focus from products and service to gaining a deeper understanding of the customer, and how to help them solve problems through their preferred channel. Working with scale providers is a great way to achieve this goal.”
For technologies of most interest to survey respondents, 76% of insurers and 65% of banks ranked data analytics as one of their top two emerging fintech technologies. Surprisingly, blockchain ranked quite lowly for survey respondents as a technology of interest in the next three years despite recent investment made by financial institutions.
Looking to the road ahead, the report notes: "Fintech innovation remains a race – and there are no clear winners yet."
"At the rate the industry is evolving, financial products and services – and the technological infrastructure behind them – will look remarkably different in a decade. Financial institutions that take the time to define their fintech strategy and align it to their future vision and business goals will be best positioned to forge the future of financial services."