'Tears in my eyes': Tyro chief on open banking

The government urgently needs to steer Australia into an open API economy or it risks missing a huge opportunity, according to Tyro Payments executive director, Jost Stollmann.

“The API economy is at risk of becoming Australia’s missed opportunity and we are so behind it’s not funny,” he said at the RFi Group’s Australian Retail Banking Summit held in Sydney on Thursday.

Stollmann told the audience that Australia must catch up and that, when it comes to open APIs and open data, it is lagging other major markets. This is particularly the case when compared with the UK and the European Commission, which have taken the lead in pushing policies that open up the market to challenger banks and fintechs.

His point? Why can’t Australia get onboard with the open API and open banking environment and free up the market to new players? The banking sector has long held a ‘closed door’ approach and seems loath to see that change, according to the German-born entrepreneur who has turned bank bashing into an art form since he started Tyro Payments.

“I think an API economy is the only way we can fend off the threat of big data integrators - giant colonialists like Ant Financial Services, which is like Citi, PayPal and E-trade all rolled into one,” he said. “These are not revolutionary ideas if you look at it from a customer’s point of view.

“The API economy is beautiful; it creates an environment where the best idea can win. It eliminates the partnership lock-ins or lock-outs that today’s business community face."

Simple Bank

Noting the recent release of the Productivity Commission’s technical inquiry into open data, Stollmann reminded the audience that this effort is not that impressive when you think the EU has mandated that as of next January all banks must offer open data and open APIs.

“You can’t imagine what that does,” he added. “All the good folks in the banking industry who are battling for innovation now get their projects approved. Because it’s a mandate, suddenly talent and money are allocated.”

The Tyro payments founder and former chief executive exhorted the banking establishment to rethink its positon and embrace open banking and the API economy, claiming “it would be so much better for all of us".

Stollmann argued that Australia needs entrepreneurs who will “go for disruption" rather than marry a big institution that will "cut short their potential".

“I have tears in my eyes when I think of the great start-up Simple Bank - the first to bring a rock and roll user experience to banking. What did the founders do? They sold out to BBVA for $170 million," he said.

One of those founders is the now 38-year-old former Melbourne student, Joshua Reich, who moved to New York where he built the banking platform.

Bank friction

Stollmann has long been passionate about the plight of SMEs and their declining economic contribution, calculating that based on historical growth figures there is a $100 billion opportunity gap.

“The question is which bank will help Australian SMEs to grow, create the products, services and jobs of the future? We estimate there is a $7 billion waste in bank friction because we offer them todays outdated solutions and a $60 billion shortfall in unsecured lending to SMEs," he said.

“The reality is, in the digital century, these businesses are not asset-based they’re IP-based and as such these business leaders don't have homes in the Eastern suburbs. Banks have got to get their heads around this and start providing SME’s with facilities that actually support growth."

Asked how Tyro viewed the New Payments Platform, Stollmann said he was unsure whether the NPP platform will stifle or enable competition.

“Will NPP members create easy affordable access for the rest of the community and will transaction pricing be stifling or enabling? No-one can tell me," he said. “It is in the interest of the banking establishment to stifle competition so I’m expecting that.”

Later, during a panel discussion on open banking, Stollmann said Australia had a very sophisticated regulatory infrastructure and capabilities are, to a large extent, established. “What is required is a government that can overcome the natural resistance of the banking establishment," he added.

According to George Lucas, managing director at Acorns, open banking will happen. “You either participate and innovate or you’re just going to be left behind."

Greg Symons, the co-founder of marketplace lender, SocietyOne, explained to the audience that the market shouldn’t get overly caught up with the fintech label.

“We are entrepreneurs who have great ideas and have mobilised them for the benefit of the consumers. It’s not about a huge movement against the banks but people who are very responsibly giving it a go," he explained.

Upcoming Events
Australian Banking Innovation Summit 2021
Sydney, NSW, Australia
See all upcoming events
Subscribe to receive insights delivered straight to your inbox
Latest news, unbiased expert analysis and insights across banking and finance