Finance Industry Ripe for Disruption

Finance Industry Ripe for Disruption

In the second of our weekly series on FinTech Devonport, we speak to Chris Werry, Business Analyst at SecuritEase, a fully integrated front office and back office stockbroking system.  Chris is also a Level One Resident.

 

 

What are your views on the state of the NZ FinTech industry?

The finance industry is ripe for disruption with plenty of people making a lot of money clipping the ticket, lots of inefficiencies and now, with Kiwisaver, consistent inflows of investment funds.

 

However, it is important not to underestimate the challenges facing FinTech startups in NZ. The NZ finance industry is very small, both in absolute and relative sizes (e.g. the ASX market cap is more than twice the size of the NZX per capita despite ASX $1.5 trillion vs NZX $144 billion). The NZ industry is dominated by a few major players which are mostly owned off-shore by the Australian banks and insurance companies. Any innovation in the banks (and there isn’t a lot because they are so large and protected by the Australian regulators) tends to happen in Australia and is shipped to NZ.

 

However, every challenge is also an opportunity. For example, NZ is dominated by small businesses – 97% of businesses have less than 20 employees – so Xero built a global accounting package on the back of this targeting a sector the big players weren’t interested in.

 

SecuritEase, the company I work for, has built a profitable business over the last 15 years by building a platform that seamlessly handles all the eccentricities of the NZ and Australian markets, uses commodity hardware and open source software, and a per contract-note licensing model.  Brokers in NZ choose us over our global competitors because our platform is tailor-made to suit their needs, is cheaper and has fantastic local support.

 

Most of the other successful FinTech startups in NZ I have seen are in the SME or consumer sector eg Vend, Timely, PocketSmith and ShareSight. Again, this shows founders leveraging the positives of a small market.

 

Where do you see the greatest opportunities for your business over the next year or two years?

For us, it is leveraging the major disruption coming to the Australian sector from the replacement of the ASX clearing and settlement systems (see below for blockchain). Expanding to new markets as their finance sectors mature (e.g. South Africa) and leveraging our existing IP into new market sectors.

 

Are you expanding your markets overseas and if so, where?

Continuing our focus on Australia and starting to move into South Africa and Europe

 

What are you currently working on?

Working with customers to expand their product offering and building the technology to support this. Helping customers handle constantly increasing regulatory and compliance requirements eg. FATCA and CRS. We’re also spinning off parts of our product into new stand alone products we can sell to new market

sectors

 

Is blockchain part of your roadmap?

The ASX is replacing their clearing and settlement system with a distributed ledger solution: https://www.asx.com.au/services/technology-solution.htm.  We will be integrating our product with the ASX distributed ledger platform however this approach is relatively controversial: see https://www.linkedin.com/pulse/asx-actually-failure-blockchain-patrick-mcconnell/

Introducing FinTech Devonport

Introducing FinTech Devonport

This week, we start the first of a series on FinTech Devonport.  Increasingly, FinTech is coming to represent technologies that are disrupting traditional financial services, including money transfers and currency conversions, loans, fundraising and asset management. In this series, we meet the disruptors, the innovators and the trailblazers operating in this sector.  Some are Level One residents, others hail from further afield.

Alex Raison, JHC Systems and Level One resident

What are your views on the state of the NZ fintech industry?

The firm I work for, JHC Systems Ltd, is predominantly UK based so it’s interesting to compare the two worlds. NZ is less mature but that means that firms aren’t tied down by legacy software and processes. It’s an exciting time for FinTech everywhere so it will be great to see what comes out of NZ (and Devonport in particular)!

Where do you see the greatest opportunities for your business over the next year or two years?

Over the last few years, we’ve seen technology as the catalyst for explosive growth in every industry, where entrenched businesses suddenly find themselves battling to stay relevant in a world full of billion-dollar startups and finance is no exception.

Over the last few years, JHC has invested heavily in new technologies and products to support the digital transformation of the Wealth Management industry. We’re helping our clients stay relevant, agile and compliant in a world where customers no longer want lunches with their financial adviser while they talk through their portfolio, they want on-demand, interconnected dashboards and visualisations which is something we can help with.

Are you expanding your markets overseas and if so, where?

Traditionally we’ve focused on the UK market but we recently opened an office in Dubai to target the Middle East and we’re currently looking at partnership opportunities in New Zealand and Australia.

What are you currently working on?

In 2017 JHC released our new product, Neon, which is a cloud-based compliance monitoring solution aimed at transforming how Wealth Management firms approach the monitoring of their client’s portfolios. We automate compliance checks to flag problems up immediately rather than this being a manual, time-consuming task run every 3 months or so. Senior management get an up to date picture of the state of their firm, compliance staff can focus on the big picture rather than getting bogged down in the process and investment managers get more timely notifications of problems with their client base.

Is blockchain part of your roadmap?

The core of Figaro, our investment management platform, allows stockbrokers and wealth managers to buy and sell securities on exchanges around the world. Although blockchain seems perfect for disrupting this process where it could remove all the intermediaries between two counterparties, we’ve yet to see any practical way of transitioning from the current settlement systems to a blockchain, so at the moment we have no plans to integrate any blockchain technology. 

On your bike!  Level One’s Latest Resident

On your bike! Level One’s Latest Resident

Karl Woolcott is the living embodiment of why you should follow your passion.  He operates the bespoke cycling tour company Ride Holidays which organises cycling holidays for thousands of lycra-clad Kiwis and Australians, but says it doesn’t feel like work.  RIDE goes everywhere where there are roads:  Italy, Spain, France, Canada, Vietnam Australia — the New Zealand destinations include Wellington and Taupo.   Even though Karl looks as if he’s spent most of his life on a bike, he’s at pains to stress that RIDE’s trips cater for all levels of riding.  His oldest rider so far has been 81 while his youngest riders are teenagers. They also encourage non-biking partners to join their trips; and tailor events and activities throughout the tour to ensure they don’t spend the whole time staring out the window of a minivan.

Karl’s a former travel agent who hails from Hataitai in windy Wellington, so he’s finding life in Devonport relatively calm.  He’s still getting used to the Lake Road traffic but then again, who cares – he’s on his bike!  The bike tours take him overseas around four months of the year, but in his non-travelling months you’ll find him at Level One most of the week.  For the latest on what’s hot in the cycling world, he’s your man.