Kiwis are taking their fintech to the world – and presenting opportunities for investment, especially in Auckland.
In our previous instalment in this two-part series on investment in Auckland’s fintech sector, we looked at the first two success factors for a global fintech hub, as detailed in a recent Oliver Wyman report on Singapore, namely:
- a startup-focused investor ecosystem, and
- a progressive regulatory environment
In this instalment, we focus on the second two factors:
- cross-border access to customers and partners, and
- a skilled and innovative workforce
Global reach
In 2019, the New Zealand Financial Innovation and Technology Association (FinTechNZ) took a delegation of 25 companies to the Singapore Fintech Festival, which was attended by approximately 117,000 visitors. It was an opportunity to tell the world there is a vibrant fintech ecosystem in New Zealand. The New Zealand fintech community was active again in the 2021 Singapore Fintech Festival and Hong Kong Fintech Week. In Singapore, The Monetary Authority of Singapore (MAS) recognised Kiwi FinTech company Valocity as a finalist for the Singapore FinTech Festival (SFF) Global FinTech Awards.
FinTechNZ executive board member James Brown (FinTechNZ Executive Director 2017–21) says people are changing their view of New Zealand. “Before people thought New Zealand was about meat, dairy and tourism. All of a sudden, investors were keen to know about our fintech products and what support they would need. We brokered the conversation between those who had funds and those who needed them,” says Brown.
Our growing fintech investment marketplace is offering overseas investors new opportunities to invest in innovation. It comes back to New Zealand’s reputation as a good business environment. Since 2018, with the difficulties of Europe and Brexit, the UK has looked to New Zealand as a destination of choice for investment houses – New Zealand was seen as up and coming. Negotiations launched in June 2020.
“One of the core outcomes of the UK–New Zealand Free Trade Agreement was around aligned regulatory standards between the UK and New Zealand to make it easier to do business,” notes Jason Roberts, Executive Director of FinTechNZ.
Additionally, the forthcoming Microsoft data centre due to open in west Auckland around 2022 to 2023 means access to these huge data sets will give us a distinct advantage. (Amazon Web Services has recently announced a $7.5B data centre based in Auckland).
There are strong links, too, with North America and Hong Kong. Companies like Vend, Pushpay, Xero, Power-Finance and TSG are highlighting the opportunities here. Overseas reach will expand further thanks to our digital free trade agreements with Hong Kong, Chile, Australia, Singapore and possibly Canada.
Greg Shanahan is founder and managing director of TIN (Technology Investment Network). Its reports (including free downloads) help identify growth opportunities and directions for the tech sector. He too notes growing overseas interest, reflected in the high number of acquisitions by offshore entities. “In early 2022, we will be publishing our first Fintech Insights Report, which we expect will raise international interest,’ says Shanahan.
Shanahan explains how fintech has benefited from the evolution of the SaaS cloud-based revenue and distribution model: “It overcomes the tyranny of distance for New Zealand, removing hurdles and collapsing the cost of market access, leveraging the internet as a pathway for rapid customer acquisition. The size of the investment opportunity is vast compared with the scale of our economy, so we can see a gear-change quite quickly.” Aotearoa’s remoteness is now one of its strengths.
Jacques Richter of New Zealand Growth Capital Partners elaborates: “The conditions that developed the innovative culture in Kiwi founders are rapidly changing, with previous barriers turning into tailwinds. In addition, the seismic changes to the way business is being done globally over the last 18 to 24 months have levelled the playing field for startups based in New Zealand while competing on a global stage. Combine these trends with a strong diaspora network, and it is clear that these are truly exciting times for local startups with digital exports,” says Richter.
Binu Paul of the Financial Markets Authority (FMA) also points to the number of multilateral and bilateral trade agreements in place that provide a pathway for New Zealand fintechs to scale globally into larger markets. Some examples are the Digital Economy Partnership Agreement (DEPA) with Singapore and Chile, as well as agreements with Australia, Pacific nations, ASEAN countries, China, Hong Kong, Malaysia, Thailand and Korea. “These trade agreements provide a critical bridge for fintechs to scale into the Asia Pacific region while leveraging our global reputation,” says Paul.
Talent critical
The advantage for tech companies is the opportunity to work anywhere in the country while drawing on a global talent pool. But of all New Zealand’s main centres, Auckland remains the hub, having the greatest access to banks, wealth managers and infrastructure providers, as well as the most extensive skilled labour force. The keys to fuelling that labour force lie in links with education.
As James Brown notes, “New Zealand is developing talent at a much younger age. We are talking with AUT and the University of Waikato about fintech and AI, and working with the Ministry of Education to bring new modules in.”
Auckland is an easy place to attract talent. With a balanced lifestyle, as well as exciting career opportunities, it’s a desirable city to relocate to. Auckland’s best-known tech clusters are in the central city, Parnell, and the Innovation Precinct in Wynyard Quarter on the Waitematā Harbour – an urban oasis and home to large tech companies and startups alike.
No longer held back by distance and with rich talent and global market opportunities, Auckland is well placed to serve New Zealand as a fintech hub offering strong investment incentives.
Find out more
Contact our investment specialists to learn more about fintech investing in Auckland, New Zealand.
DISCLAIMER: This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Tātaki Auckland Unlimited. Tātaki Auckland Unlimited disclaims all liability in connection with any action that may be taken in reliance of this article, and for any error, deficiency, flaw or omission contained in it.