Backers of Bold: the Money Fuelling NZ Fintech
New Zealand is behind the world in financial-technology (fintech) disruption. A statement that might sound counter-intuitive to the patriots among us who still remember Aotearoa being a pioneer in the roll out of EFTPOS 30 years ago.
But this is the founding thesis of Mike Burke and Marty Kerr, co-founders and Partners of the only specialist Fintech investment fund here, unapologetically named the New Zealand Fintech Fund (NZFF). “It started as our project name and then when we started to think about the brand for our investors and fintech partners, we realised that we should just call it what it is. Fintech plus New Zealand” describes Kerr.
The early-stage investment fund was born over a conversation between Kerr (former Country Head and Exec of Visa) and Burke (former Director of Westpac NZ’s venture arm) who met while evaluating investment opportunities in a personal, angel capacity. “Marty and I realised pretty quickly that we really believed in the same gap in New Zealand and we were able to articulate different reasons for investing in opportunities” Burke says. “I will hone in on strategy, brand and people while Marty will be about commercials and the underlying economics and opportunity”.
NZFF is a collaboration between Point 16, a specialist business growth and consultancy firm that Burke established a decade ago and Icehouse Ventures, the largest venture firm in New Zealand. Point 16 already has a Private Equity arm which buys and holds New Zealand SME’s, typically those that have been focused around a key person and can benefit from technology and process improvements.
Burke and Kerr are on a decade long journey to create value for their investors while supporting Kiwi business to meet their true, uncomplicated potential.
Disruption Will Be Homegrown
New Zealand is uniquely positioned, standing on the verge of significant regulatory change in consumer finance. Open banking has matured in other territories but is yet to gain traction in NZ. The Customer and Product Data Bill that promotes regulated open banking initiatives is imminent and New Zealand’s Reserve Bank is motivated to accelerate competition in the banking sector. These two initiatives alone mean the fintech, open banking and neo-banking sectors are about to gather a lot of momentum – a great place for consumers, brave fintech founders and those keen to support them.
Kerr points to other markets as the indicator of what will happen here “in every western market we have looked at, UK, US, Australia we have seen domestic, digital neo-banks emerge and take 10 -20% market share of retail banking customers within a decade of launching. In New Zealand today, that number is less than 1% and there is huge dissatisfaction from consumers, industry and government about the competitiveness in the New Zealand banking market’
“Open banking has been alive and well in the UK for almost a decade as well” Burke adds. Open banking is a financial services model that allows companies to access financial data in traditional banking systems through APIs that is supported by Government. This model completely changes the way financial data is shared and accessed and has enabled global fintech unicorns to flourish such as Stripe, Plaid and Oak North among many others.
This market is yet to be made in NZ.
Who to watch in this space
Kerr said that the team has already reviewed more than 75 opportunities this year and describes the Kiwi talent pool as ‘deep, brave and exciting’. They have already made their first seven investments, two of which could be categorized as potential neo-banks.
Household names in the next decade?
Emerge
probably the best known in the list, started their life as SquareOne which focused on Kids and their financial literacy (Kerr describes SquareOne as ‘the reason he doesn’t have do the dishes every night with his three daughters’). The team has now launched Emerge a digital first banking alternative for SME’s.
Debut
building the next generation of consumer banking right here in Aotearoa. Already have market leading features like Universal Interest which pays interest on every dollar you have with them.
Bloxx
Industry veteran (Chris Smith) meets Hollywood (Cliff Curtis) to tackle the New Zealand housing crisis head on. Bloxx has the audacious but single minded mission of getting Kiwi’s into homes. An innovative model that replaces the mortgage and will get Kiwi’s into homes with 1% deposit, affordable payments and much faster way to build equity.
