On Monday 16 April, I attended the AltFi conference in Sydney.
Generally speaking, alternative finance or AltFi, is delivered by non-traditional funding sources (excluding payday lenders) and tends to be sourced through digital channels.
Themes of the day included the mainstreaming of alternative finance, the government’s policy agenda and opportunities for collaboration between new entrants and existing players. In framing the day’s discussion, FinTech Australia posed the question: “Have we really improved the customer outcome?”
The key take-out was that many of the trends we are seeing in payments are reflected across other areas of banking and financial services. New entrants are providing services and opening up areas for collaboration with existing players and government is continuing regulatory reform.
As in the payments industry, change in AltFi is being driven by consumer trends, technology development and regulatory change.
As emphasised by OnDeck in the keynote address, Australians are rapidly taking up alternative finance offerings, with the Australian market growing more quickly than the United States. This mirrors our high level of fintech adoption. Equifax noted that millennials, in particular, have shown greater tendencies to use alternative finance, possibly as a result of their comfort with digital channels.
OnDeck highlighted that momentum for AltFi in 2018 was being driven by a number of regulatory hot topics including open banking, mandatory consumer credit reporting and the Productivity Commission Draft Report on Competition in the Australian Financial System.
In addition, Australia continues to import ‘best-practice’ regulation from the United States and the United Kingdom. A panel session on digital mortgages discussed the open attitude of regulators – as evidenced by ASIC’s ‘red-tape’ forums, which are designed to reduce red-tape and achieve a practical, positive outcome for companies seeking some regulatory flexibility.
At an afternoon break-out session, Equifax highlighted that the breadth and speed of change in financial regulation is also driven by technology. This includes the introduction of mandatory breach notification laws, KYC for crypto-currency and the development of a trusted digital identity framework. These themes will be familiar to those of us in payments.
The theme of collaboration between new entrants and existing players also came through in many of the sessions.
A session on partnerships and collaboration noted that one core question was to ask: “Are we stronger together than apart?” It is important to get the partnership right from the start, and it is important for each element to be individually successful.
Likewise, OnDeck highlighted the importance of collaborative self-regulation and noted industry work in the United States to deliver standardised lending terms.
The core themes discussed at the AltFi conference align with the trends and views that we are seeing in the payments industry. AusPayNet as a self-regulatory body will continue to play this collaborative role in payments – including on issues such as CNP fraud, open loop transport, the fraud in banking forum and in managing core payment systems.