November 1, 2018

The Major Fintech Trends in Australia in 2018 and Beyond

November 1, 2018

The Major Fintech Trends in Australia in 2018 and Beyond

Finance, Fintech

The time for fintechs is here. In the past few years, we’ve seen how fintechs have grown into an industry that has transformed how we look at financial services today.

Leveraging the use of technology, not only has it made financial services more efficient, it has opened up a new way for traditional companies to innovate in ways that have not been possible before.

Insight: Fintechs have brought on the emergence of innovative solutions that have changed the way we manage our finances from online and mobile payments, big data, and alternative finance.

Data: Global fintech investment roared at a record pace in the first half of 2018, reaching US$57 billion. (KPMG)

Key Action Point: Use these trends to inform your strategy in the Financial service industry.  

In recent years working with companies in and outside of Australia, we haven’t walked into a financial institution (or any client under serious disruption) that hasn’t evaluated or is currently developing something in the fintech space.

This includes major financial services institutions, innovative startups, venture capital, private equity firms, and distant business models that see fintech as their salvation.

At the moment, it seems that ‘fintech’ is often the easiest answer to disruption.

In fact, at Step Change, we’ve focused on the Financial Sector, and we are seeing three to six briefs a month that could arguably be categorised as fintech, a statistic that’s up over 500% on the previous financial year and even more on the one that preceded it.

If you are a financial firm looking into bringing fintech into your systems and operations, here are major trends we are seeing this year that could make a great impact for your business in the years to come.


Trend 1: Trust (or the Lack Thereof) Is the Mega-Trend du Jour

Longevity used to be the predictor of success and a shortcut for consumer trust. However, this is no longer the case — customer trust is at rock-bottom. There is a lack of trust throughout financial services, and it’s little disruptive brother, fintech, is tarred with the same brush.

Fintech integrates two distinct areas that demand the most credibility in any given industry — finance and technology. For a fintech company to succeed, it needs trust from the customer and a certain degree of transparency from the company.

For a fintech company to succeed, it needs trust from the customer and a certain degree of transparency from the company.
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We have seen over time the evolution of financial services companies: they once merely focused only on communicating features; then they evolved and included the benefits of using the technology (which consumers find more motivating); and finally, instead of just delivering just the features and benefits, they have also looked at the implications for their consumers’ lives.

Fintech, however, has fallen behind its big brother, financial services, in this respect, as its focus is on technology (which is intrinsically feature-biased) before trust.

Fintechs will be judged on their delivery of promises. This trend is driven by the paradigm shift of the global financial crisis and the ever-present, always-in-the-media royal commission (among other things).

To drive this point home, we need to ask the fintechs that have brilliant strategies, positioning in markets, or cutting-edge technology: why do they still struggle to shine?

Trend 2: Customer-Centricity Enabled by the Tech in FinTech

What is fintech really?

Is it a category for which businesses fit into?

Is it a particular set of technologies that are used to deliver customer benefits?

Or is it an enabler designed to satisfy the unmet needs of customers across the myriad of financial services?

The answer is, it’s all of these things. But at the heart of these questions is the customer.

The subcategories within the landscape are full of customer needs that are unmet and customers that are dissatisfied.

Products are complicated and indistinguishable from each other, with no true points of differentiation.

Fintech is such a revelation because it’s the enabler that sews together all the opportunities created by a financial sector that couldn’t keep up with its peers.

Technology’s adoption is unprecedented, and with its adoption, the ‘professional aloofness’ of financial services and its ‘walls of intimidation' are being knocked down.

What used to be areas that seem foreign to the common man — finance, investing, and asset management — are now areas that he is now able to experience and understand.

With this in mind, fintech companies are now expected to take measures to put customers at the centre of their businesses.

So we go back to the questions, “Why do customers really choose any company? What makes that provider different?” In our work, we have researched customers of some of the leading financial services institutions and fintechs in Australia.

When asked what made them love their major financial institutions, instead of responding with “the great interest rate" (because they’re rarely a true distinguishable difference), they responded with “the convenience of the ATM network” or “the ability to do my banking with my iPhone”.

So what we see here is sector-wide, higher-order needs of the customer, like convenience, security, peace of mind, which are now made possible to deliver through fintech.

Trend 3: Technology with ‘Purpose’

Purposing a business is the practice of linking the day-to-day operations to a greater cause that (1) unites your audiences and stakeholders, (2) galvanises the business and sets the churn off, (3) creates differentiation beyond price and technology alone.

It’s true that ‘purposing’ a business is a mega-trend across categories and sectors at the moment; however, in the context that fintechs are operating, becoming a company with a cause can be seen as a shortcut to legitimacy, credibility, and trust.

The best fintechs are recognising the need to have the courage to fight and win back the trust of Australians, whether they be business-to-business relationships or business-to-customer relationships.

We can see through Australia-wide research pieces like the lifestyles of health and sustainability that Australians are starting to put health, wellbeing, and values at the core of their decision-making.

Whilst fintech and financial services lag, this wave is indeed coming, and more and more Australians are making their decisions based on these values.

The LOHAS consumer market is valued at $26Bn and is growing rapidly. It is being driven by the consumption decisions of 4 million adult consumers and is impacting nearly every sector of the economy. The financial sector’s history and reputation mean there’s an opportunity to stand out on these values.

Trust doesn’t happen overnight and can only be proven by actions. For fintechs to win and stand out, they need to ‘purpose’ their business now so that when this set of values become primary to Australians’ decision-making, they are there to reap the benefit.

Recommended reading: The Business Case for Creating a Purpose-Driven Organisation

Trend 4: Financial Decisions Are Inherently Emotional

In our experience, emotional connection always comes before the financial benefits. Fintechs need to realise that when it comes to finance, the two are always connected. However, there are still some fintech companies that simply highlight monetary advantages as their core competency. What they don’t realise is that the real breakthrough is in taking it a step further by asking, “How will our technology impact our customer’s life?

As technologies appear and as it seems to be putting people further and further at arm’s length, inevitably reducing the human connection, customer loyalty will decrease and, in effect, companies will become forgettable.

As fintechs do what fintechs do, it’s important to fight to maintain an emotional connection with their customers and stakeholders.

As with all human relationships, transactions, and communications, we need to remind ourselves that how you say what you say is as important as what you say and, often, is more important than the technology alone.

In fact, when we look at a range of Australian and international studies about technology adoption and how technology plays a role in decision-making, we realise that the percentage of Australians that are truly motivated by the technology compared to its implications to their lives is very slim.

The fintech we see succeeding know that at the heart of any business or customer decision is still a person.

Recommended reading: Why People Buy: Here’s What You Need to Know about Buyer Psychology

Trend 5: Consumers Question Legitimacy

Fintechs make promises around quality of services, risk and mitigation, and security, yet many of them lack the legitimacy to back it up. Customers are becoming weary of this.

Customers now understand that inherent in the use of technology are the risks. So the best firms in the market are finding ways to directly address and build their credibility, educate consumers on how to evaluate it, and directly address the misconceptions that surround the sector.



To gain a competitive edge in the fintech space, you need to keep up with the trends that matter not just to the business but to the people you are serving.

So focus on building and gaining trust among your customers. Be customer-centric. Be driven by purpose, thus establishing an emotional connection with the people that matter. And back up your promises and claims to build credibility.


Read next: Key Insights from Roy Morgan's State of the Nation Finance Report



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