A major fintech investor has warned that global “super apps” pose a serious threat to Australian banks.
There might be an app for everything, from gaming and virtual accessories to receiving a home loan or credit card, on-boarding into a new job, getting paid, investing, or paying with Bitcoin.
The introduction of “super apps,” rather than a splintering of the client base to small neobanks that operate purely online, will be the most significant danger to Australian banks, according to Simon Cant, co-founder of Reinventure Group.
Cant told the AFR Banking Summit, “The neobank threat never really hit launch velocity.”
Despite the recent tech drop on share markets, investors in Australia and the United States still have “still more firepower than ever before,” according to Cant, who supports “disruptive technology.”
Meanwhile, Square, the US-based software company that bought Australian buy-now-pay-later leader Afterpay in January, plans to expand its Cash App globally.
In the long run, the software business intends to integrate Bitcoin into the app, calling it the “native currency” of the internet.
Big banks need to start looking at social media giants, human resources software like Flare, and gaming apps, according to Dom Pym, co-founder of Australian neobank Up.
Pym said, “This is where people are using technology, and so they’re going to use finance and banking through that.”
“That’s where the next generation of banking customers are.”
Pym already has 500,000 customers and is preparing to launch a home loan product later this year.
“For us, it’s the only channel,” he said.
The industry is currently worth more than $US20 billion ($A28 billion). It is anticipated to grow to $US30 trillion in the next ten years, whether gaming or employing a virtual image of ourselves to do business in the virtual world.
Pym said, “The way that we work and the way that we play is changing dramatically.”
“Australian banks need to be in the Metaverse,” he added.
CBA CEO Matt Comyn stated that purchasing a Gucci handbag online is not for everyone.
“I know it sounds kooky,” he said.
However, Comyn also said financial technology and blockchain would “absolutely” be a continuing source of innovation over the next decade.
“Crypto, clearly, is a polarising topic,” he added.
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“There is a lot of talent in Silicon Valley going into crypto and De-Fi (decentralised finance) and data analytics.”
In the harsher market conditions, Comyn predicted a “shakeout” as less mature enterprises suffer.
He added that with stablecoins plummeting, every regulator considers the appropriate consumer protection level.
Still, the global cryptocurrency market stands at $US1.4 trillion. With this, Cant of Reinventure believes Bitcoin will become a “global reserve currency” in the future.
However, NAB executive Angela Mentis said the bank took a “wait and see” approach to any retail cryptocurrency use.
Mentis said, “What we’re really interested in is the underlying blockchain technology and how we can use those to solve customer problems.”
NAB has signed up to Carbonplace, a new carbon credit settlement platform that employs the technology.
“Carbonplace allows our customers to buy and sell voluntary carbon credits through a blockchain carbon settlement system.”
Agriculture clients also use blockchain, including NAB’s recent investment in agtech startup Geora to improve farmer supply chains.
NAB has also worked with the Reserve Bank on a central bank digital currency (CBDCs) alongside Macquarie Bank.
CBDCs, unlike cryptocurrencies, would function as a centralized wholesale “currency” that could be exchanged between financial institutions.
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
