Later this month, the British government is sending a delegation of policy makers and startups to Australia.
According to the Department of International Trade, it has nothing to do with basking in the Aussie sunshine – the delegation is coming to check out our fintech scene.
While Aussies and Brits have some common ground in terms of language, culture and comedy, our markets do differ.
Australia has a decentralised economy, we trust our banks more than our cousins in the northern hemisphere do, and our fintech regulation is still in its infancy.
The result of these differences is that British fintechs will need to be aware of five key facets of Australia’s fintech sector.
1. Australians (generally) trust their banks
The UK's banks were hit hard by the storm of the global financial crisis. Some, like Northern Rock, collapsed completely. The Royal Bank of Scotland had to be bailed out by the taxpayer.
Almost overnight, British consumers developed a visceral distrust of their banks, providing a golden opportunity for feisty, customer focused fintechs like TransferWise to step up and flourish.
By contrast, Australia's banks were some of the few that remained stable and profitable in the wake of the financial crisis.
The big four banks are major contributors to Aussie GDP and dominate the consumer market.
They're also technologically advanced, offering slick customer experiences like contactless card payments.
However, it's not all roses – the big four have faced a lot of political pressure over their perceived monopoly on the market, demonstrated by a recent government inquiry into their lending practices.
Most Aussie consumers don't worry that their bank is going to lose all of their money overnight, so the British brand of deeply distrustful, anti-bank rhetoric might not be as effective down under.
However, critiques of the size and structure of the big banks are definitely credible opportunities for fintechs.
2. Australia is decentralised
Australia doesn't have one centralised fintech hub to mirror London. Much like the US, Australia's finance and tech industries are spread across major cities like Sydney and Melbourne, making it that little bit harder to nurture a nationwide fintech community.
However, while New York and San Francisco seem to be polarised into finance and tech respectively, talent is in relatively equal measure in Aussie cities.
I imagine that Australian fintech will manifest in several hubs across the country.
3. There's opportunity in the profit margins
As Jeff Bezos, the founder and CEO of Amazon, once said, "your margin is my opportunity".
This mantra can be applied to the Australian fintech market. There's opportunity for fintechs – Aussie, British and otherwise – to fill the gaps left by activities like SME lending that’s been traditionally regarded as unprofitable by banks.
4. Regulation has a way to go
The UK government was quick to adapt and respond to disruption in financial services.
By providing bespoke regulation and support for new entrants, London has quickly become a global fintech leader, by comparison, Australia has moved relatively slowly.
For example, alternative finance – an area of fintech that's booming in the UK and New Zealand – is largely unregulated.
However, Australian policy makers are listening to fintechs, and last December the government launched a regulatory sandbox for them to test their products before applying for expensive regulatory licensing.
This year, the Australian Securities and Investment Commission established the Digital Finance Advisory Committee to advise on policy and reform.
UK fintechs should note the different regulatory landscape, but also view it as an opportunity to shape the framework of the future.
5. We have each other's backs
Last year, Australian and British regulators signed a co-operation agreement to help financial technology companies expand into each other's markets.
This month's delegation is also a time for forging partnerships between the not-so-distant nations. How's that for camaraderie?
So, UK fintechs: make no mistake, while we share a language and a fondness for beer, our markets are certainly different.
However, in that difference lies abundant opportunity for collaboration – and I'm excited to watch it unfold.
Lachlan Heussler is the managing director of Spotcap Australia and New Zealand and has more than 15 years’ experience in financial services.
