If we look at history, right from the time of cavemen, Kings and right up to the modern days today, not a lot has changed. From the discovery of fire, to the invention of the wheel, it is technology that has distinguished men from animals and in turn the civilized from the uncivilized. At a point of time, the bow and arrow was considered as the latest war weapon/ technology that could determine the winner of a war. Today, the dominant position of a country is confirmed by the strength of its economy, which in this information age, depends heavily on technology.
Also, throughout the ages, finance/ money is something that has been and continues to be indispensable. Nothing can be done or achieved without money. Today, that very system of banking and finance is on the verge of being modified on a large scale. The very concept of people using cash is being replaced by plastic money, cashless society, online banking, etc. The World as we know it is changing!
In today’s day and age, the talk of every town is Fintech. Fintech is what is ushering in the age of the cashless, digital society. Every banker is worried about the impact that Fintech will have on their industries and in turn their businesses. Fintech today threatens to smash through the established order of Banking and Finance. With more people opting for digital banks and online banking services, banks are feeling the heat as a lot of the services they offer, will soon be redundant. Bankers are working hard to integrate this technology into their day to day operations in order to protect their businesses from competition and to ensure that they are not obsolete.
These concerns are felt most severely by bankers in New Zealand. The reason is simple. New Zealand is in line to be the next big finance hub. This is not news, its actually a well known and an accepted fact. However, this tech disruption is a blessing in disguise in an advanced economy.
The reasons for the success of major financial hubs through the ages have been very simple. The presence of big businesses operating in these cities/ countries and the presence of banks and financial institutions to support these businesses.
Today, having a physical presence of offices across the globe is not as important as it used to be. Having a dedicated and a skilled talent pool and the right infrastructure is all one needs to build a major global hub – and New Zealand has all of these in abundance.
There are a few key factors that are important for building a major financial hub and New Zealand seems to tick all those check boxes.
- Regional Head Offices of MNCs and global retail/ manufacturing giants: Most banks earn a large chunk of their income by serving MNCs and doing every task that they need regularly. This includes the mergers, acquisitions, deal advisory, audits, investment banking, salary accounts etc.
A large part of their income also comes from raising funds for them and providing loans to them for their organization’s growth.
This ensures that banks have a set client base who are willing to try out the new products that they are coming up with. A global MNC is also able to ask for the various services that it gets globally, thus forcing the bank to upgrade their services and be a World Class Fintech solution provider.
New Zealand has plenty of regional head offices of MNCs which need a lot of support from the Banking and Finance industry and hence can easily provide all major services (including insurance) to these MNCs, right at their doorstep.
- Excellent startup culture:In order for banks to succeed and integrate technology, a good number of startups are needed. It is these startups, which can come up with new innovative technologies that can help people interact with banks better.
New Zealand has a fair number of startups that focus on the Finance and the Fintech space. The startup space is beginning to heat up as many investors are now making trips all the way to New Zealand just to check out the startups and the companies that are present here.
Also, New Zealand startups have made significant progress and can provide significant solutions to banks for providing better services to their customers. These regional offices can easily check and implement these solutions at a local level first and then at an international level.
The reason why New Zealand has a thriving startup ecosystem is a world class educational system that New Zealand offers.
- Fertile ground for talent: New Zealand has some of the best Universities in the World. Its faculties and administration encourage students to spend a lot of their time in research, innovation and development. This has allowed a lot of new fintech startups to come up in New Zealand. With a highly urban population, scaling these startups is easy and many of them are successful.
This makes New Zealand a fertile ground for acquiring companies and hiring talent that can easily add value to an organization.
Other University students who choose to join the work force are also talented and prized employees who have proven to be great executives capable to scaling a business to greater heights.
The University of Otago is a 149 year old university that is well known globally for the high educational standards that it has set for its students. It has regularly upgraded its courses to ensure that the student passing out is in sync with the World outside.
- Government support: Another important point is the support offered by the Government in terms of the business friendly policies that they offer. A smaller regulatory framework and low costs of regulatory maintenance makes it very easy for new companies to set up shop and come up with innovative products.
This is a key ingredient that is necessary for the success of a finance hub. As cities that have been nerve centres of global finance for decades together, there is a thick regulatory maze that has to be navigated. This in itself is expensive and companies often need high priced lawyers to get their businesses to comply with all the rules and regulations.
This is a headache that new businesses do not face in New Zealand.
Thus, New Zealand has all the right ingredients to be the next New York or London of the Fintech world. For anyone looking to build their careers in finance, New Zealand is the best place that promises to revolutionize the existing financial World order and hence is the place to be in the coming years.
Fintech, just like any other internet technologies can be operated easily from one country. You just need to have the right talent in place who can serve their customers remotely. In order to scale the products on a global level, more talent has to be recruited.
The foundation for building a Fintech hub has been laid. With the right kind of talent and the right kind of infrastructure in place, the next Facebook, Amazon, Google of the Fintech world will surely come from New Zealand.