There seems to be little doubt that the Australian financial market may be irrevocably changed by the developments of the last 12 months, as the Royal Commission made public so many of the issues within the banking system that needed addressing.
That appeared to weaken some of the trust the so-called Big Four banks had earned over the years, and now the floor has opened for challenger banks and enterprises to stake their claims and try and corner some of the market share.
The ‘subscription economy’ in general is booming, not least for streaming services by the likes of Spotify and Netflix, but also in banking as reward schemes and tailored, incentivized offers become more mainstream.
Now GoCardless, the fintech with backing from tech giant Google has secured an additional $75million as it plots a global period of expansion to try and break into key markets. The financial backing has come from the venture capital part of Google (known as GV), which is known to invest in key areas it believes will deliver growth, such as new finance and artificial intelligence (AI) opportunities.
The aim of the company is to reach new businesses with a way to collect direct debits around the world, as new successful funding rounds give them scope to carry out what would be unprecedented levels of growth for them.
With GV already involved, as well as Salesforce Ventures, backed by the customer relationship management (CRM) specialist, and also Adams Street Partners, there is a growing confidence in GoCardless that they could be one of the unicorn startups before long.
Pranav Sood, their director of international expansion, said on a visit to Australia that they now had over $120million to plough into expanding their direct debit arms, saying these developments had given them ‘the ability to really take your business to the next level’, and said ‘working with those sorts of investors’ was another step up on the ladder for them.
Aimed at both big corporations and small and medium enterprises (SMEs), this fintech follows in other footsteps of providing solutions to get around costly border transfers. The likes of Revolut have already made big gains in the sector by allowing international market transfers for currencies near market rates, and they also make their money through subscriptions rather than big fees.
The development of new technologies appears to have hit such a turning point, that when combined with the revelations from the Hayne inquiry, many decided to look elsewhere to meet their business needs.
Sood said that, since launching in Australia last year, they had discovered the local banking scene in the country was suitable for what they were offering, and they had proven solid growth in enabling consumer-to-business (C2B) payments in a variety of sectors, including from gyms, telecoms and utilities as people stop making recurring payments via banks.
Citing research from the Bank for International Settlements, it appears the direct debit market in Australia is still growing, and is up around 10% a year since 2013, reaching 1.2billion yearly direct debits in 2017.
With fintechs proliferating in Australia more than most countries, it shows the scene is also ripe for growth in a market where regulations lend themselves well to creativity and finding solutions to current banking problems. GoCardless are just the latest to benefit from this.