Finding the right technical skills will be the fintech hub acid test

When Kim Heras established Sydney's first fintech meetup in 2013 around 100 people signed up. Two years on there are 689 members of the group.

Heras, general partner at start-up studio 25Fifteen, said it was a sign of Sydney's surging interest in fintech - the application of technology to financial services.
 
The arrival of two new Sydney fintech start up hubs, Stone & Chalk and Tyro Fintech Hub, adds fuel to the fire but is also stoking demand for specialist skills that will be hard to meet.

Payments innovator Ripple has also this month set up shop in Sydney and is looking for fintech skills; the National Payments Platform is now under construction and mopping up local tech talent; and both Commonwealth Bank and Westpac continue to seek technology skills for their Sydney based Innovation Lab and Hive operations.

RoZetta Technology chief executive Ian Oppermann said that he was already "bumping his head" against the fintech skills issue. RoZetta is a Sydney fintech company supplying big data analytics to the financial sector.

Oppermann said he was looking to find skills in markets outside of Sydney and also considering outsourcing some development work.

Heras said that finding good technical skills was a problem worldwide and explained why really great software engineers based in San Francisco could "earn a fortune".

Sharon Lu, general manager of the Tyro FinTech Hub said that there was anecdotal evidence of Australians returning home to work on the NPP and other fintech initiatives. While Lu acknowledged the technical skills issue, she agreed with Heras that it should not limit Sydney's fintech horizons as there were opportunities to outsource or offshore actual code cutting.

She said that the typical fintech start up, unlike many other tech start-ups, was led by entrepreneurs aged 35-plus with ten or more years' experience in banking. Tech talent, said Heras, was always "findable".

Alex Scandurra is one recently returned member of the Australian diaspora. Scandurra was previously based in London where he was Barclays' head of strategic partnerships and its accelerator program. Scandurra was this week named chief executive at Chalk & Stone.

On the skills issue, Scandurra said that he had already met with a number of the Sydney universities and believed that in the past there had been an "element of underutilisation" of Australian skills with many people moving overseas to look for opportunities.

Establishing Sydney as a fintech hub should encourage more locals to stay and entice international start-ups to establish Australian operations, he said. At the same time he wanted to lure international players to Sydney.

"We will work closely with other ventures like [London's] Level39…and be a landing pad for international organisations. That needs to be one of our benchmark measures," he said.

He said that Chalk & Stone has already had applications from 140 companies looking for 300 desks. When the hub, which has the backing of a range of industry heavyweights including ANZ and Westpac, opens in July it will initially have around 150 desks on offer.

Despite the skills hurdle RoZetta's Ian Oppermann said he was optimistic about Sydney's ability to become a magnet for fintech startups. Although he acknowledged "it may never be as big as London… (fintech) is one of the few areas that works well for us - where you can get an idea to a product in three months."

Heras agreed that Australia could become a significant international player: "Fintech is one of the few areas where we can get global scale in Australia."

He said Australia's solid and well regulated financial landscape, plus the reach of the four majors, meant that a fintech start-up should be able to partner with just one bank to get "awesome distribution", while in the US it might be necessary to work with 50 different institutions to get any sort of nationwide distribution for a new product or service.

Heras believes Australia's recently signed Free Trade Agreement with China could provide Sydney fintechs with the opportunity to export financial products and services to that market, although he acknowledged Australia would be "chasing Singapore".

It's not the first time that Australia has attempted to become a global financial hub. In 1999 former Sydney Futures Exchange boss Les Hosking was appointed to lead Axiss Australia, intended to encourage international financial institutions to use Sydney as a financial services hub. But it was an initiative that never really took hold.

Sixteen years on the goal posts have shifted. The advent of ubiquitous internet access, smartphones, peer-to-peer financial services, and even digital currencies mean that financial services are no longer reserved for the big boys.

KPMG's 2014 report on fintech prepared for the Committee of Sydney found that A$27 billion worth of current banking industry revenues were at risk of digital disruption.

Oppermann said that even before the two new fintech hubs set up in Sydney this year there was plenty of activity in the area. But he said the specialist hubs would be useful to hothouse start-ups and connect them to potential partners or investors.

But Fintech start-ups will pay a premium for the opportunity.

Tyro is asking $625 per desk per month (though it has yet to name any anchor tenants), compared to Sydney start-up space offered by Fishburners which charges $400 a month. Chalk & Stone's prices will be comparable to Tyro's.