Judo Bank gets arm lock on place in Fintech 100 list

Australia’s established banking quartet, Commonwealth, ANZ, Westpac and National are under increasing pressure to either charge their way of doing business or be overtaken by the increasingly powerful new disruptive on-line banks headed by Judo Bank.

The just released annual Fintech 100 list of companies receiving the most growth capital funding ranks Judo Bank at number 33. 

Disappointingly it is one of only three Australian companies to make the top 50 on the list.

Where the Fintech top 100 companies came from around the world.

But Judo’s burgeoning presence continues the advancement of on-line banks as the way of the future.

Another four Australian companies have been listed among Fintech’s 50 emerging companies but it’s the prominence of Judo Bank that captures Australian interest in the banking industry. 

“Open banking is at the forefront of the evolution of the financial services industry, designed to put customers in control of their data wherever it may be held,” the report says

“Open banking facilitates competition; competition drives innovation; and innovation leads to better products and services for customers. The landscape is changing.

“ Many companies on this year’s list have benefited from this global policy shift (whether in Europe through the Payment Services Directive (PSD2) and General Data Protection Regulation (GDPR) or the UK’s Open Banking regime or Australia’s Open Banking and Customer Data.”

Ben Heap, a founding partner of H2 Ventures, which prepared the report, suggested turbulence might be ahead for the banking industry because of digital disruption.

“Digital financial products and services are changing the very nature of money flows and marketplaces around the world,” Mr Heap told the AFR.

“As industries converge, players from adjacent sectors are entering financial services.

“Most venture capital is going into stand-alone disrupters, reflecting that they have the greater capacity and flexibility to innovate in the market.”

The list show that of the 11 companies to raise more than a billion dollars over the past three years, eight are from the Asia-Pacific area, including China, India, Indonesia, Vietnam and Thailand

The report, compiled by KMPG, produced stunning figures to show how much venture capital is being pumped into start-ups wanting to disrupt the banking sector.

In total, the 100 companies on the list have raised more than $18b in the previous year and more than $70b in their lifetimes.

With the traditional banking sector under unprecedented pressure following the Royal Commission’s adverse findings and public scepticism of bankers’ claims to have  rehabilitated their moral thinking, online banks are increasingly in favour with customers.

The list was also a warning shot against Government laxity and failure to provide adequate funding for fintech startups in Australia.

The majority of the companies listed as recipients of growth capital funding in the Fintech 100 list are from Asia.

It’s a clear message to Australia that current funding in the sector has to be at least maintained, but preferably increased, to allow local startups to continue developing,  or risk becoming an importer of fintech services and advancement from more proficient countries.

Australia ranked fifth overall on the 100 list with seven inclusions, trailing America (15), United Kingdom 11, China 10, and India 8.

Airwallex is the highest ranked Australian company at 32, one step ahead of Judo (33).  Delayed payment dynamo After-Pay Touch is 47.

The happy group at AirWallex. Rated the top Australian company on the Fintech 100.

Thirty-two companies on the list have raised more than $100m in just the past 12 months.

Liberal senator Andrew Bragg , who heads a senate select committee on fintech and regtech, surprisingly drew more encouragement than many expected from Australia’s modest showing.

His best assumption, according the Australian Financial Review, was that Australia was doing: “Relatively well which bodes well for our review.”

Insisting that the government was committed to helping Australia , senator Bragg said: “We want to be as good , if not better than Israel, California, the U.K. and Singapore. Clearly there is a lot more work we have to do, but it’s not like we are starting from scratch.”

The inquiry will recommend policy reform in the hope of finally providing substantial assistance to Australian start-ups.

This is how the Fintech 100 list rated Australia’s three inclusions.

32: Airwallex facilitates cross-border transactions by offering secure payments facilities that let customers fix exchange rates for each transaction and reduce currency volatility. The software also integrates with an invoice and payments system through an online web portal. Their $US80m Series B raise in July is the second largest funding round in Australian history. Notable investors Tencent Holdings, Sequoia China, Square Peg Capital, MasterCard, Tagline, Forex and International Payments. Global HQ Australia. Founded 2015. Last year 49

33: Judo Bank is a new finance challenger making it easier for Aussie businesses to get the funding they need and the service they deserve. It offers tailored solutions for Australian small to medium-sized enterprises. Notable investors Myer Family Investments, Credit Suisse Asset Management, Abu Dhabi Capital Group, OPTrust Private Markets Group, Tagline. Global HQ Australia. Founded 2017. New to list 

47: AfterPay provides simple instalment plans for online shopping users with an option to spread purchases across four equal instalments. Afterpay offers the option to view and manage payment schedules as well as pay in advance of deadlines. The company estimates it processes more than 10 per cent of all physical online retailing in Australia. Afterpay has around 4.3 million active customers and 30,600 active retail merchants on-board. Notable investors: Matrix Management Corp Tagline Shop Now. Pay Later. Global HQ Australia. Founded 2014. Last year 26 

“Innovation alone does not change economies and society. It is the scale of the companies on this List, serving over 2.5 billion customers globally, in combination with the innovation they are driving that is changing the world.,” the report says

“China has led the Fintech100 for the past three years and this year is no different with three Chinese fintechs in the top 10. However, don’t ignore India with 583 million people living in urban cities and with 23 per cent of the global middle class population. 

“India has 900 million mobile phone users but only 271 million bank accounts, this country is primed to leverage fintech in a way that no other developed country can contemplate. 

“We have identified eight Indian fintechs in this year’s list with two companies (Paytm Communications and Ola) making the top 10. 

The four Australian companies listed by Fintech as emerging companies are:

ATHENA re-invents the model for home loans in Australia. Athena’s innovative digital platform is a product of a two-year journey, focused single-mindedly on home owners and their needs. It creates customer efficiencies with technology – avoiding the cost of bankers, branches and overheads – and passes on the savings to customers via lower rates. 

DAISEE has developed a proprietary semantic engine that interprets meaning in conversations between businesses and their customers. Daisee’s solution applies AI and Machine Learning to analyse unstructured voice data at scale, automatically scoring each call, continuously flagging those considered “high risk”. This enables businesses to rapidly review, analyse, and address all of their customer calls.

SEMPO is a platform for rapidly and efficiently getting cash-aid to people affected by humanitarian crises. It solves beneficiary identification, cash disbursement and program monitoring in one seamless place. This means NGOs can spend less resources and time to find vulnerable people and more helping them.

SLYP is seeking to eliminate paper receipts. Traditional receipts are a burden to customers and outside of a proof of purchase, they provide no value to retailers or consumers. This usually results in receipts being “binned” which comes at significant cost to the environment not to mention the lost opportunity for retailers and customers to connect.