The fast-growing FinTechNZ industry association has launched a new sub-group targeting the wealth sector, similar to the InsurTechNZ network established last year.
James Brown, FinTech NZ head, said the WealthTechNZ think-tank would assemble interested parties to map out how the sector operated, how it could be improved with financial technology and develop a new “funding model”.
Brown said the ultimate goal was to establish a collaborative partnership with sources of capital in NZ – including KiwiSaver, managed funds and the big Crown financial entities – and fintechs.
He said while there was a natural fit between fintechs operating in the wealth sector and funds, the “conversation” would likely expand to how the NZ technology sector in general could grow by working with capital-allocators.
“How can we all come together to overcome the simple mathematical equation that there isn’t enough money in the value chain for NZ businesses when they need to grow,” Brown said. “… Can we shift the dial on the funding model?”
The local fintech sector could blossom much more quickly if it had access to investment from the total NZ capital pool, he said. Collectively, KiwiSaver and the retail fund sectors manage about $100 billion while the two big Crown funds hold over $80 billion between them.
Investing just 1-2 per cent of those funds in technology firms would make a huge difference to the local industry, Brown said, and potentially fast-track global winners.
“The reality is other countries can scale [tech firms] much quicker than we have seen in NZ,” he said.
While just a handful of local tech start-ups – including Xero and Vend – have gone global, “in other countries 20 or 30 companies can scale quickly” because of better access to capital.
Grand funding plans aside, the new WealthTechNZ group would likely tackle grittier issues such as open-banking protocols (which has now morphed into a wider “open data” question) and how ‘agile’ fintechs could mesh with the financial establishment.
The inaugural WealthTech gathering attracted a crowd of about 20 – including representatives from Chelmer and the NZX. Brown said the first networking event for the sub-group set down for May in Auckland was expected to draw a bigger audience.
Earlier in April, consultancy firm EY NZ released a new report commissioned by the InsurTech group. The EY survey found about 17 tech firms playing in the insurance space had launched since 2017 “tripling the previous high in 2015”.
In a release, InsurTech chair, Jason Roberts, said the survey found 72 per cent of the nascent tech firms were already working with an existing insurance business while over 80 per cent “believe insurtech companies will be competitive globally”.
“However, 63 percent do not believe there is enough collaboration between incumbents and Insurtechs to realise a successful transformation to the ecosystem,” Roberts said in the release.
“The survey found 77 per cent of players are finding solutions to improve the efficiency of insurance administration, 33 per cent use a new business model and existing technology, 29 per cent focused on integrating multi and omni-channel and 25 per cent on AI, compared to Australia where platforms and other technologies and blockchain were the focus.”
FinTechNZ, part of the TechNZ alliance, has grown to 184 members since launch early in 2017 and was on track to breach the 200 mark this May, Brown said.