4 Aussie fintechs you need to know about
From the humble hills hoist to the indispensable wifi, Australia is both a nation of technological innovators and keen adopters. After all, if you can think of a better way to sun-dry your clothes we’d like to hear it.
And with the recent influx of technological innovations in the banking and financial sector, such as the launch of the NPP and developments in mobile banking, Australians are getting more and more options to make everything from budgeting, saving, borrowing and even investing simpler and more convenient.
But just who are the Australian fintech players making our lives easier? Here are four of the standout Aussie businesses you should definitely know about:
According to Roy Morgan figures from May 2018, Australians are opting to use mobile banking more than ever, with 46.5% of us having used our phones for banking in the 12 months to May 2018 - up 3.1% on the previous year.
So given Australians love to manage their money online, it’s hardly a surprise that they’re also jumping onboard money management apps like Frollo to keep track of their finances.
Founded in 2015, Frollo is a free, Australian-based ‘personal finance and budget management app’ which aims to - you guessed it - help you save money by providing a better overview of all your income and expenses.
How does it work?
Not only does Frollo allow users to ditch the old pen and paper budgeting method by offering an easy-to-use mobile app, it lets them link their various bank accounts, savings accounts, credit cards, business accounts and even overseas accounts to the app. Frollo will then sync any incoming and outgoing transactions in order to provide you with a more complete financial picture.
Sounds good so far, right? Well Frollo makes life even easier by allowing you to categorise your transactions using tags so you can see exactly what you’re spending on everything from groceries to rent.
At this point, alarms bells might be going off in your head screaming “security, security, what about security?” While the app does require you to sync your various accounts using your login details, Frollo states that it will never make changes to your accounts or approve transactions (nor does it have the ability to).
It will hardly come as a huge shock, but cash use in Australia is on the decline. Look at it this way, according to RBA figures, Australians used cash to pay for $218 billion worth of goods and services in 2007, while we used cash to pay for similar services to the tune of $162 billion in 2016. Compare that to debit and credit cards, which rose from $250 billion worth of payments in 2007 to $496 billion in 2016.
So given the steady move away from cash, what’s happened to Australia’s favourite way to save - throwing loose change into a jar? Well some banks have started offering roundup tools as an alternative. These round up the transactions you make to the nearest $1 (or value of your choice) and deposit the difference in your savings account.
Enter Raiz. Formally known as Acorns, Raiz is an Australian micro investing platform which also allows users to save by setting up automatic roundups, but the difference is that this change is then invested.
How does it work?
Raiz works in a similar way to the savings account roundup features mentioned above. Once you’ve linked your day-to-day bank account to the app, it will then round up your transactions to the nearest dollar.
For example, if your regular morning coffee costs $4.20, 80c would be deposited into your Raiz account. You can also make additional lump sum contributions (up to $10,000 a day).
The money you deposit into a Raiz account is then allocated to an investment portfolio of your choice (ranging from conservative to aggressive options).
Like Frollo, Raiz does require access to your bank account, but it doesn’t store information or enable any funds to be transferred from your bank account. But Raiz does charge fees! While you won’t be charged for a $0 balance, other balances under $5,000 will be charged $1.25 a month and balances of $5,000 and higher will be charged a cut of 0.275%.
The days of sitting down with a bank manager to talk about getting a personal loan aren’t quite gone yet, but with the emergence of online lenders the process has certainly changed for many Australians.
With lower overheads, online lenders are often able to offer better rates for borrowers, and the same is true for peer to peer lender (P2P) SocietyOne.
Founded in 2011, SocietyOne was Australia’s first marketplace lender, and has since provided more than $450 million in loans.
How does it work?
But wait, what exactly is a peer to peer lender and how is the process different from taking a personal loan out with a bank? Well unlike a normal bank, P2P lenders like SocietyOne facilitate the lending of money to borrowers from ordinary investors - all online!
Because of this and because of the lower overheads which come with operating online they’re able to offer borrowers - especially those with good credit history - rates which can be more competitive than traditional lenders. Speaking of personal loans, SocietyOne offers borrowers a number of different loan types: from car loans and wedding loans to debt consolidation loans.
On the flip side, investors can use the platform to lend out money with varying rates of return depending on the type of loan they’re willing to put their money towards and the time frame they’re willing to invest over.
4. Volt Bank
Having taken Europe and the United Kingdom by storm, neobanks are already developing on Australian shores, ready to challenge the country’s traditional banks and lenders. But hold on a second, what is a neobank?
Neobanks are 100% digital banks - both in terms of their platforms (online, no branches) and the systems their running on. But neobanks aren’t just defined by being ‘digital’, they’re also trying to shake up the way people bank by using technology to give customers greater control over their finances and help them find new and innovative ways to save.
That’s where Volt Bank comes in. Taking the title of Australia’s first Neobank, Volt was the first neobank to be granted a restricted Authorised Deposit-taking Institution (ADI) licence.
How does it work?
Because Volt is yet to be issued a full ADI licence it is currently only testing features on it’s own staff members and not the general public, so we’re a little bit in the dark as to exactly how it will function for everyday users. Stay tuned though, because Volt is hoping to secure it’s full licence in the near future!
What we do know is that Volt Bank plans to launch with savings accounts, transaction accounts, term deposits and foreign exchange as part of its initial offerings, and will later look to expand into personal loans, home loans and credit cards.
The neobank has also promised to offer competitive interest rates on it’s range of products as well as comprehensive data analysis to help customers better manage their money and find ways to save.
Until then, you can head over to the Mozo banking hub to compare a range of banking products from both traditional and online banks.