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Fintech in New Zealand Grows Despite Lack of Clear Strategy from Government

Despite the several initiatives introduced to encourage fintech development, New Zealand is still falling behind other countries such as the UK, the US and China in the support it provides to boost the sector, according to industry observers and experts.

New Zealand took several early steps to support fintech, including passing a tailored regulatory regime for equity crowdfunding and peer-to-peer lending under the Financial Markets Conduct Act 2013. But experts believe that New Zealand needs a clear strategy and policy direction from the government to keep pace with international developments.

“The New Zealand government needs to take a more strategic approach to fintech and the financial services sector generally, if New Zealand is to gain the full benefits of fintech innovation,” Simon Papa, the director of law firm Cygnus Law, which advises businesses including fintechs, wrote in a blog post.

“In my view, the key issue isn’t a failure to implement one or more fintech initiatives but the apparent absence of a true strategic approach at government level to fintech and the financial services sector more broadly.”

Chapman Tripp, New Zealand’s largest commercial law firm, urges to establish a public/private fintech advisory group to provide policy advice, but also to set up an innovation hub within the Financial Markets Authority, consider a Regulatory Sandbox, and further engage with industry and overseas regulators.

“Fintech is a highly competitive area,” reads an earlier Chapman Tripp report. “Unless New Zealand moves rapidly, we may find ourselves vulnerable to innovation from offshore.”

Fintech initiatives

Several initiatives have emerged in recent months to boost the domestic fintech sector and connect startups with investors and potential partners. These include the Kiwibank Fintech Accelerator program, a three-month business growth program launched in late-2016 by Kiwibank, Xero, Mastercard, Callaghan Innovation and Creative HQ.

The Kiwibank Fintech Accelerator is a three-month business growth program powered by New Zealand’s startup accelerator brand Lightning Lab. It aims to provide support to early stage fintech startups.

“Because we’re a major bank uniquely focused on the New Zealand market, it’s important to us that New Zealand has a strong, local fintech community, ensuring our financial services sector continues to evolve and grow,” said Kiwibank’s CEO Paul Brock.

For him, New Zealand has the potential to take a leading role in the fintech revolution.

“We’re very ambitious for New Zealand fintech,” he said. “With enough guidance and perseverance, Wellington could establish itself globally as a place where great fintech ventures are born, joining other cities such as Singapore, San Francisco and London.”

Another notable initiative is the New Zealand Financial Innovation and Technology Association (FintechNZ), which was launched earlier this year by some of New Zealand’s biggest financial businesses with the support of NZTech.

Mitchell Pham, NZTech and FinTechNZ Chair, and Augen and Kiwi Connection Tech Hub Director

The organization aims to bring together innovative companies across the diverse financial services industry to become key contributors in shaping and driving the fintech revolution.

Mitchell Pham, the chair of NZTech and FinTechNZ, and the director of Augen and Kiwi Connection Tech Hub, said the organization has already attracted the interest of many international organizations and firms.

“So far, we have received expressions of interest from over fifty organizations, including banks, insurers, finance companies, government agencies, fintech startups and international giant Alibaba Group, who all want to actively participate in growing fintech in New Zealand,” said Pham.

New Zealand’s fintech startups

The New Zealand fintech sector has been growing steadily in the past years with several very successful homegrown startups starting to gain international recognition.

Xero’s Xerocon Event

Xero, for instance, is one of the leaders in online accounting, providing business owners with real-time visibility of their financial position in a way that’s simple, smart and secure. The company has offices in New Zealand, Australia, the UK, and the US and Singapore, and is listed on both the New Zealand Exchange and Australian Securities Exchange.

Another player is Vend, a cloud-based point-of-sale (POS) and retail platform that provides retailers with the tools to manage and grow their business. Vend enables retailers to accept payments, sell in-store and online, manage their inventor, reward customer loyalty, and report on their business in real-time.

Harmoney is one of New Zealand’s largest peer-to-peer consumer lending platforms. The platform has more than $500 million in loans written so far.

Equitise is a crowdfunding platform that brings together investors and business owners, enabling Australian and New Zealand startups to raise capital from the crowd.

Smaller fintech players include Ilumony, a tech-based financial advisor launched in June that has already made more than $7 million in financial investments. Ilumony charges no fees for advice on $1 million worth of customer money.

Jude is an artificial intelligent (AI) chat bot that acts as a personal financial advisor. The solution uses one’s bank’s online banking to organize and optimize their finances.

In the insurance business, Insurely is providing a simplistic online platform for small and medium businesses to research, choose and sign up for insurance policies. The platform uses AI to give users advice.

Sharesies is an accessible digital platform that makes it easy to invest. The platform allows users to invest from as little as $5.

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