How open banking is helping fintechs thrive

The fintech ecosystem is booming and is showing no signs of slowing down.

Research from KPMG showed that, despite being in the middle of a pandemic, there has been an increase in the number of fintechs active in Australia, with 733 FinTechs recorded. Investment in Australia’s FinTech sector has also soared, with US$1.4 billion invested in 2020, the second highest total on record.

Furthermore, Aussie fintechs like Finder are expanding and investing in new markets, with the company recently launching a new US tech hub in Denver with the aim to hire 200 new staff.

Judo Bank completed a quick-fire $124 million equity raising to help it pursue aggressive growth, and AfterPay and Airwallex raised $1.5 billion and $131 million respectively in the first quarter of 2021.

The growth of Australia’s finance sector has come in tandem with the growth of Australia’s open banking and financial data landscape. Open banking uses standardised and secure application programming interfaces (APIs) to give consumers greater access to and control, over their data – and improves their ability to compare and switch amongst products and services.

According to recent research in the U.S., virtually all (99%) of the leaders surveyed believe that open banking provides an opportunity for their organisation to leverage and 66% of financial service providers have already launched or have plans in the works to launch open banking initiatives within the next 18 months.

Locally, over a dozen banks and fintechs have become accredited members of Australia’s CDR regime, including Finder, Bendigo and Adelaide Bank, and Intuit.

This is impressive traction, especially given that we’re in the middle of a pandemic.

Data and the pandemic

Data and open banking techniques have been a cornerstone to helping financial organisations thrive and navigate the challenges presented to both them and Australia’s public because of COVID-19.

86 400, for example, has used data aggregation technology to give consumers a full picture of their financial wellbeing during the pandemic by giving them the ability to see all their accounts in one place, delivering a better view of their financial lives and helping them take control of their money.

Amid the COVID-19 outbreak in March last year, Australia’s Finder launched a data powered financial wellness app.

Lauren Applegate

Over 250,000 Australians have turned to the Finder app to help them save and make money. The Finder app allows users to see all of their money in one place and with features now ranging from free credit score monitoring to cryptocurrency trading, is well on its way to become Australia’s ultimate money app, with the US and UK further in its sights.

Further growth

Navigating a once-in-a-century pandemic is incredibly challenging, but Australia’s finance sector is continuing to do so effectively and with financial data at its core.

User-permissioned financial data aggregation has played an instrumental part in enabling financial organisations to innovate at speed, and has helped the Australian population and small businesses navigate financial uncertainty. Those are perhaps the two most important benefits of data aggregation and open banking: an open financial environment where data enhances innovation, and aiding people’s ability to be financially savvy.

For startups and fintechs, trying to find ways of onboarding technologies which can drive differentiation is important. Data intermediaries are hugely helpful in giving access to user permissions data aggregation services without having to go through the whole Open Banking certification process.

We’re still very much on the journey through the pandemic. User-permissioned financial data aggregation, however, really has become the backbone to the finance industry’s ability to thrive in one of the most difficult environments we have witnessed in our lifetime.