This article originally appeared on TechInvest.
Australia has undergone sweeping changes with the emergence of new fintech players, where traditional financial services have been disrupted by a surge of new technology-driven startups.
According to a recent report, the Australian fintech sector will see a compound growth rate of 76 per cent and reach $4.2 billion by 2020. The Federal Government, regulators and industry have established several initiatives to support investment in fintech and innovation, such as the National Innovation and Science Agenda, ASIC’s Innovation Hub, NFP fintech hub and Stone & Chalk. Together they realise investment in fintech is essential to facilitate an open economy, make it easier to do business, leverage data and secure Australia’s position as a global startup ecosystem.
Nowhere is fintech disruption more prevalent than in the consumer banking and payments industries, as nearly all stakeholders benefit when transactions and payments are digital. At the intersection of these digital payments is point of sale (POS) technology. Dubbed ‘2016’s Rivers of Gold’ by revered tech entrepreneur Paul Bassat, POS software is integral to the development of the fintech sector.
It’s the gateway to payments in service-based industries such as hospitality and retail, both which make up a significant portion of Australian businesses.
For this reason, software POS is expected to see strong growth globally, with one research company predicting the market will grow at a CAGR of over 14 per cent from 2016 to 2024. In fact, the growing economies and consumer spending in China, Hong Kong, Japan, India and Australia will see the Asia Pacific region leading global demand for POS until 2020.
Our close ties to Asia and our ability to produce highly innovative financial technologies means this opportunity is ripe for Australia to pick. That said, Australia’s POS market is already very saturated, with around 100 different players in the POS space today.
However, disruption will lead to some aggressive consolidation and attrition in the next few years. The companies that will be left behind will be those that are operating in a silo, and not opening themselves up to the multitude of complementary products and services available through the API economy.
Just as POS is moving to cloud infrastructures and open APIs, so are a range of other industries, like banking, payments, food delivery, loyalty programs and accounting. There are countless stakeholders in the hospitality ecosystem, and now through APIs, they have the ability to connect to each other and create a synergy where the whole is greater than the sum of its parts.
While companies can integrate with each other off their own back, the scoping, development and testing is very time-consuming and costly. Point of sale companies have to write a new integration each time they merge with an individual third party application.
It was clear that this was a problem for the entire hospitality industry. To combat this issue, we worked with POS companies Impos and H&L to develop an API platform called Doshii. Doshii is a middleware communications layer that allows point of sale systems to plug into other applications, such as accounting, ordering and reporting programs, all through a single connection.
Currently, a number of applications have integrated with Doshii including order ahead, loyalty and membership apps. If the hospitality industry comes together, Doshii has the potential to become one of the largest ecosystems of third party applications in Australia, with the potential to export globally.
Ultimately, the success of the Australian fintech scene depends on our ability to create strong, accessible networks that seamlessly connect the key players. To get there, companies that facilitate these networks will play a key role in making this future a reality. If we want to create a healthy and globally competitive fintech ecosystem, we must continue to invest in and expand our locally grown POS technology.