Innovation and disruption have been in the spotlight recently, with our new Prime Minister Malcolm Turnbull throwing his support behind Australian startups and the FinTech industry.
Given his personal background as a technology entrepreneur, Mr Turnbull certainly understands the importance of innovation for an economy. We’re hopeful that this translates into more policy that encourages capital and skills to flow into technology businesses. Ultimately, these are the businesses that will give Australia a competitive advantage on a global scale and translate into future jobs and tax revenue.
What’s encouraging is that both sides of politics are recognising the importance of innovation – the Federal Opposition Leader and his shadow ministers spent time with us a couple of weeks ago to understand how governments can support growth-stage businesses like Stockspot.
It’s not easy building an Atlassian or Freelancer in Australia given the lack of local skills and willing capital – this is why more global technology businesses haven’t been founded in Australia and why under the historic policy environment, the chance of an Uber or Amazon coming out of Australia is close to zero. That’s not something that can change overnight but the early signs are positive.
Asia hot on our heels
Our government will need to move fast because other countries in the region, including Malaysia, Singapore, and Hong Kong, are also focusing on fostering innovation within their capital markets.
The Securities Commission, ASIC’s Malaysian counterpart, focused this year’s World Capital Markets Symposium in Kuala Lumpur on financial technology and showcased how innovation is driving the future growth of financial services around the region.
I was honoured to be invited to take part and speak at two of the event’s core panel sessions, Mastering Disruption: Reinventing Business, Winning Market Share and Democratising Finance: Innovation for Inclusion. Here I was given the opportunity to share the latest trends in digital wealth management, and discuss how automated investment services can provide consumers with better access to professional wealth management.
The push into the FinTech industry coincides with Malaysia’s growing need to lessen its reliance on electronics and oil earnings. Malaysia has been at the forefront of facilitating the growth of FinTech in the region, as they understand the profound importance of innovation in generating a vibrant and sustainable economy. They recently became the first ASEAN nation to have a defined regulatory environment to facilitate equity crowdfunding, and they also see automated investing as a way to improve financial inclusion and democratise wealth management for their growing middle class.
Lessons from London
In just a few years, London has become the global FinTech capital. The city is already host to three of the world’s biggest FinTech hubs and the FinTech community is growing fast. The British government recognises FinTech as the future of financial services and has been actively trying to attract global talent to create a thriving innovation scene. The government has introduced tax rebates for venture capital firms investing in FinTech businesses, as well as special working visas for FinTech professionals.
Stockspot was part of the 10 Australian FinTech companies selected by UK Trade and Investments to participate in London Fintech Week last month, where we got to see first hand how well established the FinTech industry is over there.
During my time in London, I met with the CEO of Nutmeg (a UK-based automated investment service) and we both agreed that making wealth management more affordable and accessible is key to improving the prosperity of our respective countries and regions.
The good news is that the growth in automated investing is so far showing no signs of slowing, with reports showing that the 19 leading businesses in the robo-advice space, which includes Stockspot and Nutmeg, currently manage over US$15.7 billion in client assets. According to the same research, that number is expected to grow to US$450 billion by 2020.
We can be a global player
With the right government support, Australia can be a global player in FinTech and innovation. As Mr Turnbull explained in his first speech as PM, disruption driven by technology is our friend if we are agile and smart enough to take advantage of it, and this reflects exactly our ethos at Stockspot.
It is also exciting for us to see that the Prime Minister subscribes to our investment strategy, with his own personal portfolio largely made up of low-cost Exchange Traded Funds (ETFs). Similar to the Stockspot investment philosophy, Mr Turnbull doesn’t believe in picking stocks but rather gets broad global diversification across assets and sectors by investing in index funds and only occasionally rebalancing or making changes to his investment mix.
We believe every Australian should be entitled to an investment portfolio that is as sophisticated as our $150 million Prime Minister’s.