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
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/