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Speaking on a panel at the ‘Fintech CEOs on the Future of Finance’ seminar in Sydney last week, Tyro Payments CEO Jost Stollmann said the bank of the future will be a technology company with a banking licence.
Tyro calls it the ‘nextgen bank’ and is building such a business. Mr Stollmann predicts one of the big four banks will disappear with the fintech onslaught.
“According to a recent Frost & Sullivan study, Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020, the Australian fintech sector is set to take $10 billion in aggregated revenues away from the big Australian banks and contribute $3 billion of new revenue to the Australian financial services sector from 2015 to 2020,” Mr Stollman said.
“This train is coming fast. Can an old-style bank respond and stay competitive? Maybe. Can all of them? Probably not,” he said.
“Just think: one of the big four banks could disappear in the next 20 years. The only question is, which one will it be? Unless the banks can unbundle their products, overcome their legacy infrastructure and compete with low-cost ‘provider agnostic’ digital platforms, they might well cease to exist.”
Mr Stollmann said Australia cannot afford to be complacent, highlighting that an increasing number of the country’s best and brightest minds are leaving the big banks in order to start their own businesses and reinvent banking.
“The government, regulators, and the wider community should encourage and enable these entrepreneurs and their efforts. We are well placed as a country to lead nextgen banking and it will take courage and commitment to get us there,” he said.
Tyro is an Australian eftpos provider that obtained a banking licence in August last year. In December, the group announced that it had raised $100 million from Tiger Global Management in New York, TDM Asset Management in Sydney and Australian technology entrepreneur Mike Cannon-Brookes to fund the next stage of its ambitious growth strategy: lending.
The group will look to compete with the big four banks in the SME lending space and is eager to leverage data from more than 14,000 businesses in Australia, for which it processes over $8 billion annually in transactions through its internally developed cloud-based platform.
[Related: Fintech threatens Australia's major banks]