When you take a step back, you may be surprised at how many bank fees, charges and costs we take for granted. As a result of their cosy oligopoly, Australian banks have become the most profitable in the world, collecting $29 billion in profit this year. But have you ever wondered why certain fees exist at all – or what could be done to get rid of them?
Fortunately a new breed of technology-focused financial upstarts (‘fintech’ for short) have started to emerge in Australia and around the world to eliminate wasteful bank fees and leverage technology to change the way people and small businesses manage their finances. By delivering financial services in a more cost effective, convenient and consumer-focused way, many of these online players are starting to win over disgruntled bank customers.
Already in the US and Europe many ‘fintechs’ have become mainstream; London-based money transfer business TransferWise was recently valued at US$1 Billion and has saved consumers tens of millions in international transfer fees. LendingClub who reduces the cost of personal loans, listed on the New York Stock Exchange this year at a value of US$5 billion.
In Australia, the fintech revolution is still in its infancy but over the next few years many fintech businesses will become household names as they revolutionise financial services. Some argue that the banks won’t let this happen – that they’re too powerful and have too much riding on it to let smaller players eat their lunch. But disruption has a habit of transforming industries much faster than incumbents have time to respond.
The new breed of challenger fintechs have a clean slate to design the banks and financial institutions of the future. Already their impact is visible and many predict this will only increase over the next 5 years. This will have a positive impact for consumers with a broad range of bank related fees and costs set to disappear.
Read more »