Andy Taylor, chief executive of fintech firm Douough, said big banks were getting bogged down in legacy systems which was part of the challenge, but the skeptic in him had another idea.
“Who has the most to lose in open banking and it’s the majors, so will they want it quickly? Of course not,” he said.
Mr Taylor said Douough began life as an innovation project for a major bank before expanding to the US because of its lead in open banking.
“We almost had to look to America because it was leading the way in open banking, even if it wasn’t through regulation. They just kept going, which is interesting when you consider the state of financial services in America,” Mr. Taylor said.
Douough is preparing for a listing on the ASX, through a strategic partnership with Monex, and Mr Taylor believes the listing will allow the business to access the best capital while remaining in Australia.
“We want to stay in Australia and show the world that we can export good technology from this region. For us it was the best strategy,” he said.
Mr Taylor said Douough did not aim to be a bank, but rather a true fintech with a customer focus from the start.
“Our model here is that we go direct to consumer, we issue customers with a bank account and a debit card under the Douough brand.
“From this perspective, we are considered a neobank because we seek to accept deposits directly from customers,” he said.
The main difference was that Douough was not getting bogged down in becoming a licensed bank, Mr Taylor said, and would instead partner with banks to offer these deposits.
“We partner with a bank in each country who can provide us with their license and the ability to accept white label deposits.
“But our customers’ deposits are held by this bank on its balance sheet and protected, we do not hold those funds,” he said.
The idea behind the model, Taylor said, was that the banking industry had a problem with a business model that was focused on net interest, not the customer.
“If we want to innovate the business model, that means we have to act like a software company and be a platform and not get bogged down by becoming a licensed bank and having to think and operate like a bank,” he said. he declared. .
The idea of partnering with a smaller bank was floated more recently by UP Bank, which is the product of the Adelaide and Bendigo banks.
Regional banks have the most to gain from fintechs, given the challenges the sector faces due to consolidation and an inability to compete with the majors in technology.
“They (regional banks) are looking at the market and saying, ‘Well, the only way for us to stay relevant in this new world is to go more into infrastructure, leverage our assets and work with fintechs. to acquire new customers. they don’t own those customers in terms of the relationship under Douough, they still receive the flow of deposits,” Mr Taylor said.
