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Stone and Chalk the new Sydney Fintech Hub established, the banks must be very pleased

Yesterday the NSW Premier Mike Baird, announced that a new Sydney Fintech Hub called Stone and Chalk will be opened in May. The new hub will be located on the 26th floor of a building in the Sydney Central Business District. The floor will be transformed into a space, with the hope that a new future for financial services will be created. Mr Craig Dunn the former head of AMP, will be the new Chairman.

a man in a suit and tie

Let me say that without doubt this is really a positive step, made by the NSW government and major industry players. An acknowledgement that more needs to be done to support local Fintech start-ups. Stone and Chalk, is a reference to the idea that much in the financial services such as regulation, compliance, reporting etc. are all set in stone. Yet, so much needs to be created and developed, this references the Chalk. Some of the largest banks and major corporations have contributed some $2m to the establishment of the hub. In the initial stages, the hub will look to provide subsidised rents for Fintech Start-ups.

It is a direct acknowledgement that in the 1980-90’s, Australia had an enormous opportunity to establish itself as the International Banking capital of Asia. But with few Government, Regulatory or Tax incentives, this opportunity never got very far. Singapore without doubt has now claimed that crown, most International Banks, Stock and Commodity Exchanges and Hedge Funds have established their Regional Asian Headquarters in Singapore or even HK.

More recently it has been clear that cities such as London, NY, Singapore and even Tel Aviv were aggressively supporting new technologies and start-up businesses and seeing some real local success stories. For Stone and Chalk, the purpose of the hub seems to be about giving local start-ups a boost, ensuring that these new businesses will be surrounded by Banking and Industry sector experts and consequently will shorten the lead time on execution of these new models. In fact Westpac’s VC group Reinventure is moving in. Reinventure were the group that invested in the local P2P lender SocietyOne.


One of the articles I read about Stone and Chalk was by James Eyres in the AFR was titled “Banks to put out welcome mats for the disruptors”. Wow, now this set off alarm bells for me. If you are a Fintech Start-up just how close do you need to be to the Banks and Financial Institutions you are competing with? Everyone of these start-ups is desperate for capital and each one of them will admit privately they are hoping to be bought out at some stage. However, what value is a Bank representative in the adjoining office going to be able to genuinely add to the development of your model?

For a Fintech Start-up, their business will succeed not if it is just supported by bankers who just know how to originate and underwrite loans etc. What will get investment and customers is technical capability and user experience competency. I would argue that the Banks cannot help with that, they are only looking to find ways to bank better.

From my understanding of what’s happening in the market, approx 90% of the global investment in FinTech start-ups right now is going into Technology rich teams that have a strong competency in Finance. While the 10% or so is going into Financial companies that have a strong technology competency.

Any Fintech Start-up that joins Stone and Chalk needs to go in with their eyes wide open and a firm hand on their wallet. The Banks have a lot to gain from such easy and close access to what could be some really dynamic local businesses. The establishment of the Sydney Fintech Hub, Stone and Chalk is a really positive and innovative solution to incubate Australian Start-ups, the banks must be very pleased.

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