Australia’s Adatree At the Forefront of Australia’s Open Banking Push

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia If Australian businesses were still on the fence about how Open Banking will transform the competitive landscape, then following the release of Australian Open Banking fintech Adatree’s landmark […]

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Australia’s Zip Co Cements Global Payments Presence With Acquisition Of QuadPay

Many quality listed fintech’s have represented once in a decade buying opportunities after the bottom fell out of the global market in mid-March.

In Australia, Zip Co falls well and truly into that category, having rallied off lows of around $1.17 in March to close at $6.35 at the close of ASX trade on Wednesday.

The buy now pay later fintech is steaming ahead on other fronts too, having this week announced the acquisition of US buy now pay later fintech QuadPay, for $403 million.

The deal will be funded by scrip, with Zip issuing approximately 119 Zip shares, priced on the 15 day volume weighted average price of $3.39.

Alongside the acquisition, the fintech is also raising fresh capital to support its expansion into the US market, raising $200 million from US based growth investor, Heights Capital Management.

Like its local competitor AfterPay, the acquisition pushes Zip further onto the global stage, and positions the business as a global heavyweight in the booming buy now pay later space. While the company already had operations in several offshore locations, the US adds an additional $6T in terms of addressable market for the business.

As a result of the transaction, Zip will have combined annualised total transaction volume of $3B, with QuadPay effectively contributing one third of that volume, via its established base of 3500 merchants and 1.5 million customers.

Interestingly, and what will no doubt have been a key determinant in the deal, especially for a fintech, both QuadPay and Zip leverage the same code base, a NZ based platform it acquired back in 2019, via its acquisition of PartPay.

Zip is proof Australian fintechs can successfully compete at the highest level on the world stage, especially when it comes to payments infrastructure and rails. Australia has a significant legacy of producing strong payments infrastructure businesses, and no doubt many more will be borne out of the inroads and talent being bought up inside aspirational organisations like Zip.

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Australia’s Largest Bank Leaves Fintech Startups For Dead With Benefits Finder App

 

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

In the second quarter of this year, the UN estimates the COVID-19 pandemic will wipe out 6.7% of all working hours, globally. That’s the equivalent of 195 million jobs.

We’re already seeing surges in unemployment rates in many countries – the US unemployment rate rose to 14.7% in April, just shy of predictions of 16%. No matter where we live, images of individuals queuing up outside welfare offices (if they exist) has become a common sight on our evening news bulletins.

Even if you’re still working now, chances are you’re worried you might not be soon. Everything has become very unpredictable, so tracking every dollar that you spend is even more important than it was yesterday, or the day before.

Which means there is a significant opportunity for startups that hone in on solving that exact problem – helping people track what they spend, reduce what they spend, find out what they are owed and save for the unknown. Right now, we all have a heightened awareness that saving money and reducing our outgoings is more important than ever.

For me, this is the moment fintech companies can really prove their mettle. Show me how I can make more money or save more money, compared to what I am doing right now. It’s that simple. If a business can execute on that, then they have my dollar – because they are promising they can deliver more of them. That is a service I’m willing to sign up for.

Ironically in Australia, a service like that isn’t being delivered by a fintech, it’s been delivered by a bank – CommBank, the biggest bank in Australia.

It’s Benefits Finder service, which was released in late 2019, helps its customers find their share of the $10 billion in unclaimed government rebates and benefits owed to them. During April, the number of claims started by customers doubled.

The app was built in conjunction with the Harvard Sustainability Transparency Accountability and Research (STAR) Lab, and aims to return $150 million to customers’ over the year.

Of course, like any great service, you have to sign up to CommBank to access it. Something tells me they are going to see a significant spike in applications this year…

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Travel Credit Cards Are Dead. Will Fintech Invent What Comes Next?

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

For years the lure of certain credit cards has been their tie ups with frequent flyer programs. While most of us don’t like credit, for some the risk/reward trade-off for the odd free return trip and/or upgrade to business class is worth it.

But what happens when literally overnight, your credit card’s frequent flyer points become temporarily worthless? As an Amex Velocity card holder, I was one of thousands of credit card holders in Australia that found themselves in that very situation after Virgin Australia went into voluntary administration. While their loyalty arm is separate to their core business, and isn’t in administration, redemptions have been frozen.

So I put in a call to Amex to find out what they would do for me. Largely speaking, it was nothing. No transfer of points to an alternative program, or refund of annual fee. Nada.

Many credit cards, like Amex have hitched their wagon to the travel industry. And while it’s almost a certainty that travel will resume at some point, will we really have an appetite to do it, like we did before?

Cashed up boomers who are most at risk of catching the virus won’t be too keen to jump on the next flight to coronavirus hotspots New York or London. Millennials staring down the barrel of unemployment will list travel last on their spending wish list (rent and food will be coming first for a while). Families struggling to pay mortgages and meet rising food costs won’t have fat in the budget for that annual Bali trip. All of this against a backdrop of mercurial border restrictions throws serious cold water on the travel industry.

And by extension, the credit card industry.

So where to next? Well, if credit cards are to survive, they need to find another reason to exist, and not put all their eggs in the travel basket. There is lots of opportunity here for fintechs that package up consumer rewards in other domains, to find a ready ear at the strategy workshops of the schemes.

When I went hunting for a new credit (yes, it’s time to kiss goodbye to the Amex), my first thought went to where the vast majority of my spend goes now – groceries. Next I thought of internet, my mobile plan spend, and then my electricity and gas.

Luxuries like travel aren’t that interesting in the new economy we’re entering into. What matters most is being able to pay the bills. The necessities. If someone can give me a credit card that allows me to do that for less, then maybe I’ll get sucked into the credit vortex again…

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Should Google To Pay Us To Use Their Rumoured Debit Card?

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

If the rumours that Google will be releasing a debit card in the near future are true, which, let’s be honest, it feels incredibly likely, then this would significantly change the fintech game, and in more ways than Apple’s previous announcement.

Many of us have allowed the slow but sure creep of Google into our lives, so it seems logical we’d eventually accept Google as a financial brand. However while there are lots of reasons why Google would want us to use their debit card (better predictive analysis for ad targeting, new revenue streams etc etc), there will need to be a strong reason for consumers to buy in.

It’s one thing letting Google Home into your living room, let along letting the search giant know what you spend on. Mind you, Google’s predictive engines are getting so powerful, the ability for them to probably figure out what we spend on now, without even looking at our bank accounts, is probably pretty good.

So what could Google offer us, to entice us away from our Revolut’s, Monzo’s and other snazzy fintech apps?

Well, quite simply, they could make it absolutely free, or pay us to use them.

The world is entering into a very strange time. Millions of workers are unemployed, and industries, which have died overnight, will face a significant uphill battle restarting (travel, anyone?). Never before have we cared so much about tightening our purse strings, and getting savvier with our money.

How we spend and the data that goes along with that is valuable. Of course, no tech giants want to pay us for it, but perhaps consumer sentiment towards this is changing?

This week, in Australia, the treasurer, Josh Frydenberg has spearheaded a push to force global media businesses, like Google and Facebook to share advertising revenue with Australian media companies, who it says drive significant traffic to the advertisers while realising none of the benefits. It is an absolute watershed moment for the industry, and many are watching very closely. The tech giants had, as one can imagine, argued against this strongly. In the end, they were forced.

These publishers know the value of what they are creating, and how tech giants are monetising it. And now they will have a slice of the pie.

Faced with a shiny new financial toy from Google, will we be as savvy?

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Coronavirus To Kill Cash For Good

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

If there is one financial instrument particularly exposed to the coronavirus, then it would have to be cash payments. For several weeks now, as virus fears ramp up in Australia, I have noticed local businesses banning cash payments overnight, to protect staff from potential infection risks associated with contaminated cash.

Banning cash isn’t fearmongering on the part of retailers – the risk of infection is real. For those still clinging on to their polypropylene bank notes, maybe don’t (or at least wear gloves). The novel coronavirus, COVID-19, has been found to linger around on this surface for up to three days.

Copper coins on the other hand, aren’t so bad. Thanks to the long understood anti-microbial properties of copper, you’ll only need to wait 4 hours before your pocket change is safe to touch again.

While cash has been on the decline for many years, it has refused to die out completely, despite the best marketing efforts of the payments industry. While nearly every sector around the world is hurting right now from a drop off in demand, causing a softening in payments volumes, could acquirers be buffered somewhat by the overnight shift of cash to card? Quite possibly. This buffer could well be sustained, spiking card payments in a short space of time.

This is because even when the pandemic relents, the public’s mood will continue to be one of heightened awareness around cleanliness, making a shift back to cash unlikely. It also means acquirers, which might be hurting somewhat now from the drop off in discretionary spending, have a potentially cashless future to look forward to.

Europe might be one of the first regions to see this spike.

According to The 2018 World Cash Report by G4S, cash represents 78.8% of all transactions in volume and 53.8% in value in Europe. In Italy, one of the hardest hit regions when it comes to the COVID-19 pandemic, a European Central Bank Payment Usage Survey estimated cash transactions made up 86% of all transactions.

There will be financial winners and losers in the post COVID-19 world. My money is on cash not being king much longer.

New readers can see 3 free articles before getting the Daily Fintech paywall. After that you will need to become a member for just US$143 a year (= $0.39 per day) and get all our fresh content and our archives and participate in our forum.

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Wages-On-Demand startup Earnd Snapped Up By Greensill

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

Supply chain financing powerhouse Greensill, founded by Australian Lex Greensill, is making aggressive moves into the wages-on-demand space, purchasing Aussie fintech startup Earnd.

It’s not the first foray Greensill has made into the space. Last October it acquired FreeUp, a London based business with a similar offering to Earnd.

It’s a natural move for the business, which sees no difference between their core line of business – helping suppliers access early funds – and employees, who are effectively time and skill suppliers to their employers.

In just a short space of time, Earnd has built up a solid and steady base of reputable clients, including local Fintech Tyro, payroll platform Ascender and hotel group Adina.

On-demand payroll is a hot space. UK based Hastee landed $268 million in fresh funding in December, while Earnin, another VC favourite, has banked more than $190 million.

What is most novel about Earnin, is it allows customers to access up to $100 per day at zero cost. Instead of setting a fee for their service, Earnin asks users to tip what they think is fair.

Last March, the unconventional revenue generation approach landed the fintech in hot water, with reports that users who weren’t actively tipping were being subjected to credit restrictions. As a result, regulators launched an investigation, after being concerned the model was essentially a way to evade some of the tough laws that had been implemented to protect consumers from predatory payday lending.

Are wages-on-demand the payday lender ‘wolf in sheep’s clothing’? It’s too soon to say. While we could all do with our hard-earned money a little sooner, chances are many of us don’t truly understand the cost we pay by not being better budgeters. It’s arguable with every dollar that’s easier to access, our financial IQ drops a few points, making us more vulnerable to long term financial health issues. On the flip side, money in our accounts sooner, if invested and saved, is more money in our pocket in the long-term. Something makes me doubt that is how the majority of payroll-on-demand users are using these platforms.

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Green Home Loans A Reality Downunder

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

The world must go green. How green is probably a debatable question, but slowly the tide is turning towards renewables and fossil fuel alternatives, with many hard-nosed climate conservatives even beginning to thaw on the issue.

Finance has a huge role to play in this greenification of the world. In Australia, companies like Ratesetter are leading the way in helping consumers access finance specifically to help fund the purchase and/or installation of an Approved National Cl…

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Financial Identity could add $250 Bn to Asia and Latam

These days, I hear headlines on Financial Inclusion so often that, it makes me wonder if Financial Inclusion is the new Fintech. The past three years in India, with the rise of payments, Aadhaar and last mile access to financial services is a great example.

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We have also had Nubank from Latin America that won Softbank’s investment, and the Grab and GoJek story in South East Asia. Some of them are taking the digital banking route to genuinely address an unbanked population, while others are simply using their lifestyle apps to provide sticky financial services.

This is in stark contrast to the overbanked West, where we see challenger banks, trying to win brownie points using ‘financial inclusion’ as a marketing ploy. There are several arguments about their scalability and viability due to the overbanked markets they are going after.

Most Fintech events these days have a panel on financial inclusion. I recently came across an event planned in India, and the objective was to make it as grand as the Singapore Fintech Festival. I understand there are several panels focused on Financial Inclusion. It’s not surprising as Asia is seen as the hub of financial inclusion.

However, in several of these instances, trying to achieve financial inclusion before getting a financial identity to the unbanked is like placing the cart before the horse.

One of the first articles I wrote on Daily Fintech was about a firm called BanQ. They were working on providing economic identities to women farmers in Africa. They were also using Blockchain to achieve that.

It wasn’t just BanQ, another startup Agriledger led by Genevieve Leveille is looking at solving inefficiencies in the food supply chain. The transaction data that Agriledger would capture in the process would act as an economic identity for the farmer. As a result they can avail other financial services, thanks to their track record on the ledger.

Even when Libra was announced, one of my biggest hope and ask from the project was solving the identity problem. It was positioned as offering financial inclusion at scale – but they were in a perfect position to first solve the social and economic identity issue as the first step towards getting to inclusion at scale.

If identity solutions are globalised, refugees can be offered jobs in their countries of refuge – a farmer in Africa, seeking refuge in Spain, could find it easier to get a loan to start or work in a farm in Spain. All he needs to show is his track record as a farmer.

It should be the same as an executive moving from one country to another for employment, without having to start from scratch completely.

On that note, I came across a report by Oxford Economics and identify firm Juvo. The report highlights the following countries and the potential GDP growth in those countries with proper financial identity initiatives.

    • India – $7 Bn
    • Indonesia – $15 Bn
    • Philippines – $15 Bn
    • Pakistan – $9 Bn
    • Mexico – $31 Bn

In essence, tapping into mobile operators and providing financial identities to one and all would add $250 Bn to the global GDP and make available about $408 Bn worth of credit.

These numbers feel too low to me, perhaps the numbers are just an immediate benefit, and not a weighted or discounted average across years.

The projection that caught my attention in the report was that identities could increase the per capital GDP by $25 in South and South East Asia. This is a massive value-add when put into perspective.

While I wish Juvo all the very best in achieving their goals on financial identities, I believe it has to be a big player like a facebook or google, who would be best positioned to launch an self sovereign identity platform. It could perhaps be centralised on day 1, but evolve into a self sovereign network of identities.

When that happens, there would be onboarding of people onto financial services like never seen before. At this stage, it is all just wishful thinking though!

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Christmas shopping? Track your carbon footprint with Mastercard and Doconomy

Alibaba’s Single’s day sales hit $38 Billion in 24 hours. The US Black Friday Online sales was $7.4 Billion and Cyber Monday sales were even stronger at $9.2 Billion. Do we know the impact of this mindless consumerism on our planet?

We will, and soon, thanks to Mastercard’s investment and collaboration with Doconomy.

Only last week I wrote about Climate change and how Fintechs should wake up to the changing global landscape and act. We are witnessing and combating the biggest crisis that humanity has ever faced. It is critical that we come together and address it.

On that note, I proposed a few solutions that financial services and fintechs could come up with to track climate impact of business decisions.

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One of the solutions was to track the carbon footprint of businesses using alternative data and disclosures. Firms will be provided a rating on how green their business models are, and banks could price their product and service offerings based on the ratings.

In essence, a greener firm could have a lower interest rate when they borrowed versus a high carbon footprint company. As a result, banks risk management will also be based on these methodologies, where their capital allocation will be higher when they do business with high carbon footprint companies.

This would create top down pressure on the entire business community and the markets to ensure they are acting in the best interest of the planet. We would also need a clear auditing mechanism to ensure firms don’t exaggerate metrics in their favour.

Now, that’s a top down approach for businesses. However, something similar can be done at the consumer end too. One of the fundamental mindset changes I would like to see is what is called “conscious consumerism” – of their carbon footprint when they splurge money in mindless shopping spree.

If we captured the Carbon footprint of purchases at the transaction level, that would be an important dataset to fix the mess we are in. This data can help gamify the process of capturing carbon scores for customer transactions.

If I did my Christmas shopping and came up with a Carbon score X and if my friend or colleague did their Christmas shopping with a carbon score Y, that could be gamified using a simple app and a leaderboard. The person with a lowest carbon footprint could be rewarded.

When we capture transaction data, and score customer behaviour, it makes them more conscious of their action on the planet. This would take time to scale, but it would start changing behaviours of customers.

As customer behaviour changes at scale, businesses have to pivot their approach to everything from sourcing the right raw materials, following sustainable manufacturing practices, using logistics with the lowest possible carbon footprint, and using the right packaging. This will have its feedback effect on competition as businesses that embrace sustainable practices quickly will have a competitive and a first mover’s advantage over their peers.

If it was China, I would even go one step further to ensure that the consumer’s social credit score includes climate points based on their spending. This would show results in a shorter span of time, and would help change business behaviour quickly.

Now, what if I did buy something which increased my carbon footprint? You should be able to compensate for that by spending money on environment friendly projects across the world, or investing the money into green assets.

So what are Doconomy doing and why are they special? First of all, DO is how they call themselves.

DO have two cards on offer, a white and a black credit card. The white card allows you to track and measure your carbon footprint as a consumer. The Black card has a built-in CO2 emissions limit – helps you become a conscious consumer (as they call it).

Behind the scenes they use an index called Aland to track the CO2 footprint of every single transaction. The index can categorise your transactions and identify its impact on the environment.

They also have a partnership with a firm called Trucost, which is a part of S&P. Trucost are experts in assessing risks relating to climate change and ESG factors. I have gone through Trucost’s clientele, and they have several big names like AXA investment managers, RBS, and several funds listed there. So clearly, they are all using Trucost to understand the climate risks of their portfolios.

In my last week’s article  I discussed about rating agencies who acted at climate bureaus for corporates. This is a very similar idea too.

We all have a responsibility to contribute to the solutions for the climate emergency we are experiencing. Time is running out. Many individuals are willing to do their part, but in many cases they find it difficult as they don’t know what else they can do. Through our collaboration with Doconomy, we hope to provide clear, effective channels to support these individual’s daily climate action.” –

Niclas Svenningsen, manager, Global Climate Action, UN Climate Change Secretariat

Coming back to DO’s offering, they are also providing compensation schemes should you break bad from time to time. Customers can cleanse their guilt by investing into green bonds or projects approved by the UN and aligned to their Sustainability development goals (SDGs). Thanks to all their efforts, DO are also a named partner to the United Nations Framework Convention on Climate Change (UNFCC).

For more information please do check out their website, I have added myself to their credit cards waiting list!

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