By Angus Dorney >>

WITH fintechs and neobanks posing an existential threat to the Big Four banks, the incumbents are scrambling to launch their own digital ventures to try to fend off the disruptors – but are they doing it wrong?

Volt, Xinja, and 86 400 are just some of the new digital-only fintechs to clear the largest hurdle to entering our market – receiving deposit-taking licenses from APRA (Australian Prudential Regulation Authority). With the largest regulatory obstacle out of the way, this new breed is poised to change the face of Australian banking forever.

Even with the significant uncertainty from COVID-19 – and there will be casualties and delays in the short-term – the long-term, technology trend is still in their favour. In fact, a recent report from deVere Group indicates that in Europe, which has a more mature Fintech market, COVID-19 has already driven a 72 percent uptick in the use of fintech apps. 

But the competition facing the Big Four doesn’t end there. The rapid proliferation of buy now pay later (BNPL) options has changed the way we spend and almost two million Australians have signed up.

NEW GENERATION USERS

With both neobanks and BNPL, Gen Z and Millennials are the largest users. This cohort is set to become the economy’s biggest spenders – particularly in the face of an ageing population.

Again, even with the current uncertainty, as the banks look toward the future, they see for the first time in their history a world in which real competition exists. 

One advantage: they still have strong balance sheets that they can leverage to respond decisively to this emerging player. The question is can they actually leverage this strength?

In a bid to compete with the likes of Afterpay and Zip Co to enter the BNPL sector, the Commonwealth Bank recently invested $300 million for a 5.5 percent stake in Swedish BNPL company Klarna. 

While many are lauding Klarna’s entry into the market, given its lack of merchant fees and the ability to use the service anywhere through its ‘Ghost Card’ feature, the question has to be asked: why did Australia’s largest bank have to buy innovation?

And why did it have to buy that innovation from overseas?

AFTERPAY CHANGED LANDSCAPE

It’s worth noting that CommBank could have bought Afterpay many times over for that amount when it went public in 2016, seeking to raise $25 million.

Instead of jumping in early, CommBank waited to see if the Afterpay model would work. When Afterpay’s $10 billion plus market capitalisation showed that it did, the bank decided to opt for a ‘buy instead of build’ approach via its investment in Klarna.

Imagine how many digital products or new ventures CommBank could have built with a $300 million war chest? So why didn’t it build innovation? Most likely because the value of building a startup from scratch, especially in a green fields space, is much more difficult to justify and measure using traditional RoI and investment models. Finance and risk departments can readily determine a return on capital when looking at a traditional investment stake in an established company, but they can’t do the same for startups.

VC ADVANTAGES

The approach for successful venture capital (VC) in the technology space is very different. This philosophy is about placing several, well-calculated investments/bets across different startup businesses.

As the Harvard Business Review has vividly demonstrated, some of the most successful venture capital companies see only a handful of their investments bear fruit, but the return on the most successful investments far outweigh the loss on the duds.

This approach simply does not fit with a traditional enterprise investment model.

CommBank seems to understand that there is also value in the ‘build’ a startup approach. In recognition of the wisdom of not putting all your eggs in one basket, it has partnered with Microsoft and KPMG to launch its fintech venture capital play, X15 Ventures.

This now means all of Australia’s Big Four have separate innovation arms. Whereas Westpac, ANZ, and NAB aim to buy innovation through their ReInventure, ANZi, NAB Venture VC funds respectively, the ‘yellow bank’ hopes to take a more hands-on approach.

Through X15, CommBank aims to manage, rather than buy, innovation. By taking a larger initial stake up front and providing the platform and operational support needed to scale – with all the transactional infrastructure, analytics, and compute power that entails – the goal is to bring 25 new ventures to market in the next five years.

USE VERSATILITY

Frankly, this is where the real returns are. Enterprises need to start building now despite institutional risk aversion and both internal and external headwinds.

Big enterprises can build innovation and build it well, but from our experience they need to do three things:

Explore new financial and risk models to justify the investment. Once they’ve recognised this value as measured by a different metric, they stop clinging to traditional investment and risk management models that only hamstring new ventures. For example, we have supported a company in property development who is looking to leverage their massive knowledge to develop a unique property technology (or ‘prop’ tech) that can be sold around the world, creating a multi-billion dollar business from one without a single dollar of revenue.  

Get out of their own way and find out how to short-circuit the politics, culture, and bureaucracy that can cause every single dollar spent to be questioned to the enth degree – even though the figures invested when building are always a fraction of a percent of the figures thrown around when buying.

Avoid simply turning to another big enterprise to outsource the development. If you want to build a startup technology you need to bring a startup mentality with superb, not outdated, technical chops into your business. We need to end the era of one big enterprise trying to help another big enterprise create a small and nimble one.

We’ve seen incredible value unlocked when these three things have been done. More enterprises should be doing this now, especially in uncertain times when every dollar should be well spent, going lean and spending fewer dollars to grow something you can control, especially when it has a big upside, is the safer and more profitable bet.

 

Author Angus Dorney is co-CEO of innovative Australian cloud service company Kablamo.

 

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By Leon Gettler >>

REMOTE working will change workplaces and the world.

Some companies are doing it very well and Australian software vendor LiveTiles is leading the pack.

The born-in-the-cloud company has been doing remote working since it started four years ago. Back then it was operating in six countries with 20 people.

Now LiveTiles has its global headquarters in New York City and has 19 offices in eight countries. It is dispersed across the world, everywhere from Switzerland, Netherlands, Denmark, Ireland, the US and of course Australia.

“From our perspective we had to, whether we liked it or not, work remotely, work flexibly, and I like to think we are best practice in our class,” LiveTiles co-founder Karl Redenbach told Talking Business.

“We are also used to operating in strange time zones.

“One of the secrets to our success is that, from day one, we have been happy to work flexibly with all our employees.”

MAKE IT PERSONABLE

Mr Redenbach said LiveTiles has simple rules and techniques in place for working remote when it comes to dealing with customers, to make it as personable as possible. 

The number one rule for its employees is to use video. It is also sharing desktops and remote sharing.

This can also include taking control over clients desktops, iPads and phones and showing them how to use the software.

LiveTiles is also working closely with the elderly who are not used to computers or websites. This is critical for people who might be quite isolated

“What we tried out in Brisbane, and it’s gone really well, is that we have been able to have not only this face-to-face connection with the carer and the elderly person, but actually help them jump online and show them. We do this by sharing their computer screens and we help them click through the government websites and information websites and key in information that they didn’t even know how to get to – because they’re not used to using this technology.”

Mr Redenbach said this was the most challenging time for him and other tech leaders.

There were some big issues. The first was health – and people’s mental health when they are isolated.

One of the key innovations created by LiveTiles was a WhatsApp group providing people with the latest government information.

“The other thing is, how do we go about supporting the community? We’ve been lucky in our businesses in that most of our businesses have had some sort of remote working,” he said.

“And a lot of our businesses are used to working outside of a traditional office setting, so we want to try to impart the knowledge and help companies and businesses in the community on how to operate in a remote environment. That’s what we’re doing right now. We’re working with a bunch of governments, right now.”

NEW WORLD IS 'REMOTE'

Mr Redenbach said remote working would “change the world forever”.

There will be some learnings out of this, he said, such as how to support people if something like this happened again.

The other key learning was for companies to understand how to trust their employees to work from any location.


“People, when they have the right accountabilities, should be allowed to work from anywhere at any time,” Mr Redenbach said.

“They should be able to work in a café, they should be able to work from home and help their kids when they need, or support a family member that might need it, an elderly person,” he said.

“Whatever it is, we should provide that flexibility and I think the positive out of this is that business leaders, business owners, are going to have to start thinking: ‘How can we allow our workforce to have that flexibility? And ultimately, I think this is better for people’s mental health.

“It’s better for society and, ultimately, it’s better for workers.”

www.livetiles.nyc

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JACK DELOSA argues the COVID-19 situation is rightly described as a fight for life – both physical and economic. Times like these call for courage and innovation in business, argues the battle-hardened business expert and entrepreneurship advocate, whose mantra right now is: “Decisive action will enable a swifter recovery.”

 

AS THE COVID-19 pandemic rages, all eyes remain, understandably, on the prospect of ‘crushing the curve’.

However, even as Australian homes and hospitals deal with unprecedented levels of fear and anxiety, it seems that business leaders are not immune to the coronavirus’ wrath, with business confidence sustaining serious body-blows in mid-March, and plummeting to record lows, according to the Roy Morgan Monthly Business Confidence Index.

Jack Delosa is a renowned Australian entrepreneur, investor, and founder of Australia’s largest training institution for entrepreneurs, The Entourage. After spending 2016 and 2017 fighting back from a commercial near-death experience, and then spending the last three years rebuilding, Mr Delosa is one of the most battle-tested entrepreneurs in Australia today. 

He is now leading hundreds of thousands of other entrepreneurs as they ‘fight the good fight’ against COVID-19 and the economic havoc it is unleashing.

“I know first-hand the fear and uncertainty that can arise in times of crisis and I can tell you that the businesses most likely to survive in this tough economic climate are those actively engaging in proactive decision-making and future-focused action,” Mr  Delosa said.

In 2016, after unexpected government changes to the education sector in Australia, Mr Delosa found himself and The Entourage three months away from a monthly loss of $800,00.

“We were months away from losing just under a million dollars a month. We needed to take drastic action, and quickly,” Mr Delosa said.

Taking swift and decisive action, Jack Delosa restructured The Entourage – painfully reducing his team of 90 to just 40 in a single day, redesigning the business model, and beginning the long fight back to full fiscal viability. Today, Delosa says The Entourage is healthier than ever.

“We're growing faster than ever, we’re more profitable than ever, and our members are happier and more successful than ever,” he said.

“It was torturous, but you learn a lot and that sets you up for higher levels of success.”

For business leaders currently battling economic uncertainty, Mr Delosa has these points of advice:

Take action:​ “More is lost through indecision than wrong decisions, so don’t just bury your head in the sand and wait for the storm to pass. The longer you choose to do that, the scarier and harder it will become to take decisive action. If you are lost, turn to trusted advisors for guidance and advice.”

Model positivity:​ “This COVID-19 crisis is an opportunity to offer ‘contagious leadership’. We are all fearful at the moment, but savvy business leaders are ‘positively fearful’. This means they are alert and confident, and are acting decisively, despite their fear. In my experience, people are silently waiting to be led. This is true all the time but, now, more than ever, the world needs leaders who model conviction, decisiveness, and positivity.”

Nurture consumer relationships:​ “It’s almost certain your current and potential consumers are at home, right now, so you have a captive audience via social media and digital content. Even if sales are declining, now is an optimal time to build your audience, strengthen consumer relationships, and build trust and loyalty. In that regard, I would be advising every business to be providing helpful, credible and compassionate digital content to their online audience.”

Keep an eye on the future:​ “The current business turbulence is tied to a health crisis – it’s not inherently an economic crisis – and what we learned from SARS and MERS is that the economic recovery will be quick once the health concerns start to decline. The businesses who act decisively and positively, now, will be better placed to thrive when the economy bounces back.”

Vitally, Mr Delosa advises against imitating others’ actions or adopting a one-size-fits-all solution.

“Everyone should take contextually appropriate action,” he said. “Some businesses are fighting for survival; others are booming. Every business has different needs but all of them require immediate action.

“The best analogy for business leaders, now, is to be like any seasoned boxer in the ring; be instinctive and adaptive, react swiftly to micro-mistakes, believe in your ability to endure, and ensure you are constantly on the front foot.” 

 

Jack Delosa​ is one of Australia’s top entrepreneurs and investors, founder of Australia’s largest training institution for entrepreneurs, ​The Entourage​, and host of the hit Foxtel series, ​Entrepreneurs ​ Mr Pelosa has been listed in the AFR Young Rich List five times, and contributed to the development of the curriculum for The Branson Centre of Entrepreneurship in Johannesburg, South Africa. He is a high-profile investor in growth companies such as Q-Biotics, Martin Jet Pack (ASX:MJP) and eMerchants (ASX:EML), and is co-founder of MBE Education and The Entourage Beanstalk Factory. His highly-acclaimed first book, ​UnProfessional, reached best-seller status within three weeks of launch. His latest book, ​Unwritten ​outlines the unconventional wisdom he has s become known for, to living a life on purpose and making the world a better place. ​Unwritten ​became Australia’s best-selling business book in one week.

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By Leon Gettler >>

SYDNEY THOMAS is in the business of empowering women in business.

She is an associate of Precursor Ventures, a US classic seed-stage venture capital firm investing in long-term relationships with founders. It targets companies in a pre-launch pre-marketing phase.

Ms Thomas has also been involved in the Girl Geek academy and she recently came to Melbourne to meet female entrepreneurs.

The academy is committed to getting female entrepreneurs to the next stage.

She said women have difficulties raising venture capital. 

“I think the hard part about venture capital is that it is much more an art than science,” Ms Thomas told Talking Business.

“What that means is often people will get introduced to VCs. The VCs will sometimes decide to invest based on data and sometimes based on gut – and a lot of these subjective decisions are often ruled by the sub-conscious, which is often not as thoughtful as the conscious.

“The sub-conscious can often lead to making decisions based on fear, or things we think we know best,” Ms Thomas said.

“That means a white guy can decide to invest in his friend, who is another white guy, just because he is a friend and trusts (him) – but there’s this unknown woman who is a little more scary, a little more untested and so they are less likely to invest in that woman.”

The result: only 2 percent of venture capital dollars went to women in 2018.

HIGH DEMAND FOR FEMALE VC FUNDING

Ms Thomas said there was a high demand from female entrepreneurs for venture capital, but they often do not have the networks and access to money that their male classmates and colleagues have access to.

Women are now finding greater access to venture capital through their networks with women who are already working in venture capital.

Ms Thomas, however, cautioned about relying too much on those women in venture capital.

“The change really happens when you have allies across the whole community,” she said. “Male VCs need to be accountable for investing in women just as women do.”

Ms Thomas said women of colour and ethnic women have even more difficulty raising funds.

She said black women raise less than 1 percent of all the venture dollars as they are ostracised from the groups that draw white female entrepreneurs.

This is something particularly pertinent to her, as a black woman.

“The good thing is people are starting to talk about it. Race has been a very taboo topic and we starting to acknowledge that race exists and should be addressed,” Ms Thomas said.

The key, she said, was to build networks with more diverse pipelines.

This is one of the areas that Precursor is looking into, she said, for Precursor is about “building bridges with people across the country”.

www.precursorvc.com

www.leongettler.com 

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.

By Leon Gettler >>

IMAGINE if you could power lights with a battery that generates its own power when activated by dipping it in water.

Hydra Light’s products are aimed at reducing the waste associated with single-use batteries and raising awareness of alternative energy solutions.

Hydra Light has developed technology that can harness the electrons liberated from a magnesium anode, when immersed in water, into a useable direct current (DC) power. The Hydra Light system is a revolutionary technology that creates power using a chemical reaction between metal and water.

All you need to make it work is water and air. 

The HydraCell uses this reaction to efficiently capture electrons released during this process, with the water acting as a catalyst to create this reaction once it comes into contact with the HydraCell.

HydraLight CEO Gerry Comninos said the company’s technology had been patented around the world and it was now in the process of commercialising the product.

“At the moment we have got a range of products that we can use the fuel cell in. So lanterns, lights, torches and power devices which would charge mobile phones,” Mr Comninos told Talking Business.

He said it could also be used on laptops and even miners’ hats.

 

SELF-GENERATING POWER

As opposed to a traditional battery, the HydraCell generates its own power.

And unlike a normal a single HydraCell, would have 250 hours of use. If you left a torch on for eight hours, the batteries would be used up. The HydraCell life would be the equivalent of about 30 AA batteries.

Mr Comninos said the HyrdraCell is recyclable and they are working on one that is biodegradable.

He said it is perfect for communities off the grid or remote communities.

As a result, there is a growing demand for the HydraCell in the Third World.

There is also a big market for the product in the US, among with the survivalists.

He said statistics show there are 1.3 billion people around the world who do not have electricity or who have intermittent electricity

“They are dependent on candles which are dangerous and start fires, kerosene lamps which give off poisonous gases and/or batteries – so we are a cheap alternative,” Mr Comninos said.

He said while the company was based in Melbourne, it had a research team in the Philippines and a contract manufacturing factory in China.

It also had a presence in Canada and the USA and was looking to open an office in London. 

www.hydralight.com.au

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

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By Leon Gettler >>

BLUECHIIP is an unusual company that has created unique and patented technology combining secure wireless sample tracking with integrated temperature reading, for use in extreme environments.

It is a technology that wirelessly tracks the identification and temperature of valuable samples, such as tissue, blood, serum and plasma, which are used in research, developing drugs, in vitro fertilisation (IVF), and viral therapies, all stored in environments such as liquid nitrogen. These materials are put into stasis and stored for a long time.

It is a unique and patented technology built into a Micro-Electro-Mechanical Systems (MEMS) unit which works in harsh and aggressive environments of minus 196 degrees Celsius. 

Typical electronic devices and radio frequency identification (RFID) technology cannot operate at those temperatures. The technology for Bluechiip devices also survives sterilisation which is important for the tracking of such materials.

The end customer for Bluechiip would typically be IVF clinics, pharmaceutical companies and researchers – but that is a broad market – so the target markets for Bluechiip are original equipment manufacturer (OEM) partners which make the consumables, such as blood bags and plastic tubes, that already have a captive market and distribution channels.

The Bluechiip tracking system in the form of MEMS, can read the samples rapidly, even through frost. It can also be moulded into any plastic.

Bluechiip devices are sterilisation resistant, including from gamma radiation. This reduces human error and increases productivity.

Bluechiip also has a multi-sample or multi-viral reader which allows users to read up to 100 samples at once. In these extreme temperatures, the micro-electro-mechanical device will read the sample where a barcode or RFID won’t work.

Without the Bluechiip micro-electro-mechanical device, the user would have to use their finger, or thaw the sample, which is a productivity issue.

IN DEMAND: US AND EUROPE

The technology was developed in Melbourne and has been patented across jurisdictions including the US and Europe and Bluechiip is moving into Asia.

Bluechiip managing director Andrew Maclellan said the company’s major market is North America which accounts for 40 percent of the global market. Europe is the next major market, which is at 30-35 percent. The company is also moving into Japan and China. 

Mr Maclellan said major customers include vial manufacturer Labcon North America, which manufactures 1.5 billion consumables a year for the life sciences sector.

He said while there were a number of other industries Bluechiip could target, such as food production, it was now focusing on the bio-preservation market.

“We know there are a number of associated industries we can enter but for us it’s about securing our target market, we maintain a strong focus,” Mr Maclellan said.

“When we’re talking about 300 million-plus samples going into store, and for us each of the chips that we place in there is best to think around $1, so we value our market at around $200 million.

“So if we can penetrate that bio-preservation market and get a good share there, we can run into the delivery of tens of millions of chips a year into that market place – we have a good launching pad to enter into adjacent market places.”

And as he pointed out, Bluechiip is the only company that can identify the sample in those harsh environments.

“There is no other technology that can do what we do,” Mr Maclellan said.

www.bluechiip.com

www.leongettler.com 

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.  

By Peter Marix-Evans >>

ACTIVITY-BASED working (ABW) has moved from workplace experiment to corporate standard in just a few years. But if you’re looking around your office and wondering why the shift hasn’t delivered on its promise – it might be because you’re doing it wrong.

Research found nearly two-third of companies plan to adopt a shared-desk workplace strategy by 2020, an increase of 30 percent. In addition to saving space and reducing commercial overheads, businesses are looking to transform their culture with a new way of working.

By its very nature, ABW is a design-led approach, allocating different types of spaces to suit business need. For example, if collaboration is a key aspect of your commercial success, dedicating spaces for people to come together makes sense.

It’s also driven by the need for greater innovation in the face of increasingly global and digital competition. ABW sets out to foster better collaboration and harness diversity of thought, increasing the likelihood of finding innovative solutions to business problems. 

Sounds great, right? But when it fails, ABW becomes a major source of frustration for employees, hindering their ability to get work done and, at worst, giving them a reason to leave.

A growing number of studies and horror stories are shedding light on the impact of getting an ABW strategy wrong.

If you’re implementing an ABW strategy or have one in place already, how do you ensure yours is a catalyst for transformation and not a reason for your staff to leave?

SURE YOU’RE NOT HOT DESKING?

One common issue is that businesses with ABW plans end up hot-desking instead. One is based on design principles to improve working conditions; the other is focused on using real estate more effectively. 

ABW is about creating a workspace to suit the type of work activity. For some people this could be collaboration spaces, for others it’s about regular access to a computer with multiple screens.

Hot-desking and ABW are not mutually exclusive – it makes sense for some staff to swap desks based on the activity they’re currently working on.

But it becomes a problem when all staff are expected to adopt a hot-desking approach, regardless of whether it makes sense for their work. Rather than motivating your employees, this often has the opposite effect.

Ensuring you’re not forcing employees to move around your office for the sake of it is key to a successful ABW strategy.

DO STAFF HAVE A CHOICE FOR WORKSPACE?

Your staff are not a homogenous group. While some thrive in noisy, vibrant workspaces, others are happiest with a desk of their own in a quiet area of the office.

Ensuring the flexibility for staff to work in a way that best suits them is critically important.

This means having a workspace designed specifically for the type of activities your staff requires, including collaboration spaces, breakout rooms, quiet areas and relaxation stations. Ensuring people have a choice about where they’re working has a big boost on productivity.

With technology providing us the tools to work from anywhere, staff don’t always need to commute to the office to get things done either.

Providing the flexibility to work from home, the café or the local park is good for productivity and will also help with staff retention.

IS CULTURE AN ENABLING FORCE FOR ABW?

ABW is not only a driver of culture – it’s impacted by it too. There’s no point in having a fantastic setup for a raft of different working styles only for your staff to be too scared to use them. 

This is where culture is key. Business that are focused on output rather than presence have a far greater chance of successfully implementing an ABW office.

The right culture allows people to work in a way that suits their activity and their personality. A constructive culture is key to any workplace transformation and ABW is no exception.

When done well, ABW is a fantastic driver of business culture. It boosts productivity, improves collaboration and drives a more innovative approach to business problems.

But it only works if it’s designed to add value, rather than to cut costs.

This means ensuring it’s designed and built to meet the needs of your staff.

www.shapegroup.com.au

 

Peter Marix-Evans is the CEO at SHAPE Australia, a commercial fitout and refurbishment specialist known for its innovation, needs interpretation, and delivery of large-scale projects that require Australia-wide resources.

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