Fintech innovation high on Australia’s priority list: NAB creates $50 million innovation fund

Venture capital by way of peer-to-peer lending or crowdfunding have become such a threat to the traditional and usually rather inflexible banks that they have become a very clear threat to their business. The fintech leaders who have a genuinely innovative idea and want to take it to market quickly are often averse to taking […]

Venture capital by way of peer-to-peer lending or crowdfunding have become such a threat to the traditional and usually rather inflexible banks that they have become a very clear threat to their business.

The fintech leaders who have a genuinely innovative idea and want to take it to market quickly are often averse to taking loans from banks, instead preferring to go the route of venture capital for many reasons, with business acumen and support of investors and lack of liability at seed stage being two major advantages.

Banks in certain regions are now catching on to the needs of the fintech innovators and gradually modernizing their business models to emulate venture capital funds, the latest example being National Bank of Australia (NAB) which has launched a $50 million venture capital fund to concentrate on fintech enterprise.

The new entity, which is called NAB Ventures, will invest $50 million over the next three years in Australian and offshore startups, and will seek equity investments or partnerships with mobile platforms, payments and data analytics companies and will be operate from NAB Labs which is an innovation center that was establishe by Andrew Thorburn, NAB’s CEO, in the early part of 2015 at the firm’s offices in Melborune, Australia.

National Bank of Australia’s Head of Products and Markets Antony Cahill has recently stated

“The new fund will help create an end-to-end innovation ecosystem. We don’t fear disruption, we need to embrace it and understand how do we give the best possible experience to our customers. Traditional models of banking are changing. There are new ideas and thinking identifying how the banking model can change.”

The bank does not consider technology disrupters to be an enemy. On the contrary, it is looking for the right companies to work with, despite the approach to the banking model being somewhat different to the traditional modus operandi.

Currently, NAB is recruiting staff to run the new venture capital fund, which will start investing in 2016.

Mr. Thorburn concluded

“The new fund will ensure NAB is able to embrace changes to deliver innovative solutions for our customers” and “build a culture of innovation and customer-led design within NAB and position the bank to be agile and adaptive to rapidly changing digital advancements”.

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