Mutuals and Fintech Startups Get Innovative Together

Forward-thinking mutual banks and credit unions are hoping to learn from some of Australia’s most innovative fintech startups as part of a market-first corporate fintech accelerator program.

The mLabs 12-week program, launched by KPMG Australia on Tuesday, will connect seven mutual banks – Beyond Bank, CUA, Greater Bank, Heritage, IMB Bank, Police Bank, and Teachers Mutual Bank – with 14 start-up companies in a bid to promote innovation.

The immersive program has been co-designed with the mutuals to help them gain access to leading fintech innovators and collaborate with them in identifying and developing commercial solutions to business challenges.

It also provides an opportunity for fintech ventures to work with like-minded mutuals, which have a combined customer base of more than two million, in one program.

Beyond Bank CEO Robert Keogh told Pro Bono Australia News they were open-minded about where the opportunities might lie.

“The whole landscape of banking is changing quite rapidly and we see some opportunities both in the younger generation of the spectrum, we also see opportunity in the more mature end of the spectrum as well,” Keogh said.

“So we are pretty open minded about where the opportunities might lie, but we do believe that the fintech program that KMPG is launching, in conjunction with Stone & Chalk, will give us some good opportunities to innovate a bit more in that space.

“I think the opportunity for us was that first of all, one it opens up the door for more innovation… The second thing is that we are collaborating with a number of large mutuals in the country and it gives the opportunity for each of the organisations to feed off one another, but at the same time, do the analysis of what those opportunities might be in a collective way. So that’s where we see the real advantage.

“The other opportunity as well is that doing it on a collective basis gives you the opportunity to actually get the benefit of leveraging the spend into the process.”

The program follows the KPMG Mutuals Review 2015 which found that mutuals were well placed to implement new technologies and ideas, and to collaborate with fintech startups.

Keogh said he agreed with that assessment, and that the program would be beneficial for both sides.

“I think the opportunity for mutuals is that one, they’re a lot closer to the customer, because the customer in fact owns the business, so that’s the first point, the second point is that because they are closer to the customer it gives them the opportunity to hear them, to listen, to understand what their needs and wants might be, and as a result of that, is the ability to be able to innovate in ways that can be far more constructive and meaningful to the customer. Add to that the fact that they are smaller institutions so that lends them with the ability to be more agile in the ways in which they go about things,” he said.

“I think the opportunities that finetchs have with us is around that ability to be agile, and also our desire to invest in the fintechs, rather than reinvent from within our own existing organisation.

“So what you’ve got is a collective of large mutual organisations that are prepared to say ‘well, collectively we can take this opportunity’ without saying that, ‘now i’ve seen that I can go and do it better myself, and build it myself’.

“I think the opportunity for doing business with us is that we are very keen to reach an outcome whereby we’re picking up on their ideas and actually assisting them in bringing them to market.”

The program follows the Energise accelerator which was run for the energy and natural resources sector last year.

Head of KPMG Innovate James Mabbott said KPMG mLabs was designed to catalyse the collaboration process.

“It will be a platform for collaboration and a safe space for experimentation – and help bring some exciting new services to life for mutual banks and credit unions and their customers,” Mabbott said.

Over the course of the accelerator, the mutuals will work closely with the fintech startups to come up with new solutions, test assumptions and co-create and prototype products and services.

They will also have access to expertise from KPMG mentors and industry advisors, including Chris Whitehead, who helped tailor the program for the mutual sector, Leona Murphy, previously head of strategy for IAG, and Andrew Davis formerly Global Fintech lead for HSBC.

KPMG’s global co-lead for fintech, Ian Pollari, said the objective of KPMG mLabs was to systematically foster greater levels of collaboration between the participating mutual ADIs and fintech startups.

“Established organisations increasingly recognise the strategic importance of engaging with and sourcing capability from the fintech start-up community,” Pollari said.

“The mutuals are eager to engage the start-up community and for the fintech ventures, the prospect of innovating with the mutuals, who represent a combined customer base of more than two million, is a very attractive proposition.

“Most importantly, KPMG mLabs will drive commercial outcomes for all participants, whether that be designing and launching new digital products and services, enhancing the customer experience or improving internal efficiency.”

The program began on Tuesday with a two-day workshop at Sydney’s Stone & Chalk.

It will culminate in a demonstration day, where the fintechs will pitch their ideas and progress to investors and finance sector leaders.