DiviPay raises $20 million Series A to fortify its full-stack spend management suite for SMEs

DiviPay, the Sydney-based start-up that offers all-in-one spend management for small-to-medium sized businesses, is advancing its aspirations with a $20 million Series A.

The round was led by an undisclosed global fintech-focused growth equity investor, with participation from Global Founders Capital, and Rapyd Ventures – the new venture capital arm of Rapyd. The round also included prominent founders such as Raffael Johnen from Auxmoney, who leads the largest credit marketplace in continental Europe, and Guy Pearson, the founder of Tiger Global-backed accounting and client engagement platform, Practice Ignition.

The Series A funds will be used to expand DiviPay into new international markets, and further build out DiviPay’s holistic product offering. Headcount is set to rise at least fourfold from the existing team of 20 over the coming year.

Beginning life as Australia’s first all-in-one expense management solution, DiviPay has grown to now serve over 1,000 companies. DiviPay offers access to an integrated corporate card for the small to mid-market, who often struggle to access traditional cards via the banks.

To proactively manage expenses, DiviPay’s cards are seamlessly tied to an intuitive platform where finance can flexibly set budgets and spending allocations for users – the platform also delivers other in-built spend management features.

And to close the reconciliation gap, DiviPay provides powerful integrations into leading accounting platforms to automatically assign the expenses at the point of purchase to the correct accounting code.

Hundreds of hours of manual work have been saved by switching from traditional corporate cards and reimbursements to DiviPay’s integrated spend-management solution.

Customers are increasingly realising the benefits of DiviPay’s offering, with the company reporting growth of over 300% in the past year.

Clients include Australia’s best-known unicorn Canva, fast-growing fintechs, including Superhero and Eucalyptus, and more established companies, such as Slater and Gordon and Michael Hill.

DiviPay also proudly serves the third sector, including not-for-profit organisations and charities, and currently works closely with Uniting AgeWell and the Autism Association of Western Australia.

In recognition of their rapid growth, DiviPay recently won ‘Best Payment Innovation’ at the 2021 Finder Awards.

Daniel Kniaz, DiviPay’s CEO comments: ‘DiviPay helps finance leaders control who can spend company funds, how much they can spend, and where they can spend it – we deliver transparency, security and autonomy in expense management.

‘I’m really proud and excited about DiviPay’s latest funding round because it gives us an opportunity to work with some great investors in fintech to further develop our mission, and to rapidly expand our footprint in terms of team, product, and location.

‘With tech at the forefront of recent changes in the working world, 2022 was always going to be a big year for DiviPay. This funding round allows us to make an even more significant impact on the market – fintech is definitely the place to be right now!’.

Tito Costa, Partner at Global Founders Capital states: ‘We loved how DiviPay entered the expense management space focusing on an easy-to-use, powerful software product and on that foundation we believe the opportunities for expansion are endless. We are excited to back the team in their next phase of growth.’

Joel Yarbrough, MD of Rapyd Ventures says: ‘Rapyd Ventures is thrilled to partner with Divipay, a leading expense management software in Australia. We are excited with what Daniel and Russell are building to help businesses and SMEs transform payment flows and financial software in the region.’

Background information

  • Daniel Kniaz is available for comment
  • Previous funding:
    – 2016, DiviPay received $100,000 in funding from H2 Ventures when they joined its fintech accelerator program.
    – 2019, DiviPay received the first instalment of $2.3 million in a funding round led by 1835i (ANZ Bank’s venture capital arm). The consortium of investors included Seed Space ventures and former Pepper Money CEO Patrick Tuttle. The funding enabled DiviPay to build its engineering team and execute its product vision.
    – 2021, DiviPay received an additional $1.7 million in its funding round led by 1835i. The funding was used by DiviPay to build its marketing, sales and engineering teams, and ensure it had the resources needed to grow and broaden its customer base.
  • Further information on Global Founders Capital and Rapyd Ventures available on request

Find out more about DiviPay here.

Five Fintechs On Friday December 17, 2021

AFF is Asia’s premier platform for global leaders in government, finance and business to exchange insights, intelligence as well as to explore business and investment opportunities. A community of 66,000+ viewers, investors, fintech innovators and entrepreneurs hailing from 80+ countries and regions. The 15th Asian Financial Forum on 10-11 January 2022 will not be one to skip. Don’t miss the chance to attend a dynamic event packed with impactful exchanges and showcase of a wide array of next-gen #fintech solutions. Grab the exclusively discounted tickets with promo code JMP47D (Exclusive to our community). Register here.

The new edition of the five fintechs on Friday is here!

This is the last newsletter on Five FinTechs on Friday for the year as we wrap up before the break, We wish you a very happy holiday season and prosperous new year

But first, news from the industry…

Visa, the world’s leader in digital payments, recently unveiled a new research showing the case for crypto is getting stronger for financial institutions. Square, Inc. recently announced that it is changing its name to Block

Further, MyBond is officially launching its rental bond services with a new website refresh & series of videos demonstrating a cool new alternative to playing rental bonds and Open was recently announced as Australia’s 7th fastest growing company in AFR Fast 100

 

Below are five fintechs to know about this fortnight!

Codat

Codat is the universal API for business data. The real-time connectivity that Codat offers enables software providers and financial institutions to build integrated products for their SME customers. Codat’s clients range from corporate card providers to business forecasting tools and lenders, and use cases include auto-reconciliation, business dashboarding, and loan decisioning. Codat was founded in 2017 and has offices in London, New York, and San Francisco. This month, Codat announced its expansion into Australia with the opening of its Sydney office, the appointment of Matthew Tyrrell as APAC Commercial Director, and a partnership with Judo Bank to simplify the way Australian businesses share information with financial service providers.

Fenergo
Fenergo enables financial institutions to deliver seamless customer onboarding experiences while satisfying regulatory obligations by automating compliance. Our SaaS Client Lifecycle Management platform digitally transforms and streamlines end-to-end client lifecycle processes – from regulatory onboarding, data integration, client and counterparty data management, Know Your Customer (KYC) reviews and remediation, to client offboarding. Our API-first ecosystem of channels, systems and data providers enables financial institutions to deliver truly frictionless customer journeys. At Fenergo we stand out for our deep expertise in financial services and community-based approach to solution development which mutualises the cost and effort of regulatory compliance. Discover more here

Monoova
Monoova partners with businesses, payment apps & platforms, to support them managing large transaction flows. They enable businesses to fully automate how they receive, manage & pay funds, 24/7, 365 days per year. Its proprietary real-time, secure platform allows businesses to access a variety of payment functions, instant automatic reconciliations, & easy-to-access reporting – so they can secure & stay in control of their payment ecosystem. Find out more here: www.monoova.com Whether you need a solution or advice across the New Payments Platform(NPP), Bpay, Direct Debit, PayTo, Automatcher, API or anything in between, they have what you need. If you are looking for a pioneer, market leader & partner you can trust for your payment solutions, get in touch for a no obligation, confidential chat – https://www.monoova.com/contact

Haventec
Haventec enables seamless and secure customer authentication for FinTech organisations. Our award-winning platform, Haventec Authenticate, provides a genuinely passwordless technology that eliminates passwords and shared secrets. Easily integrate Haventec Authenticate with your existing IAM solution and leverage single-step multi-factor protection without multi-factor friction. We would love to show you how we transformed security and experience at Australia’s 1st digital bank and ways we can help you achieve outstanding CX. Visit our website today to book a personalised demo.

Fundsquire
Fundsquire is a global source of capital that invests in innovative businesses in Australia, the UK and Canada. We work closely with our customers to offer straightforward, personalised, non-dilutive funding through R&D tax credit loans, government grant funding and revenue based financing. Transitioning from a startup to a scaleup, our own journey motivates us to create unique solutions that empower businesses to take control of their funding timeline for accelerated growth. Over the past year, Fundsquire has doubled its investments in category-leading businesses. This rapid growth has been enabled by strategic expansion of team and operations along with technology platform development. Fundsquire also brings its customers an expansive network of partners and perks to enable seamless funding options for businesses at all stages of growth.

Check out our previous issues here

Fundsquire partners with Railz to offer an integrated, quicker, and transparent funding platform

Fundsquire, a source of capital for startup and scale-ups globally, has partnered with Railz to supercharge its funding platform, offering Fundsquire’s global customers a seamless and powerful experience. Fundsquire has integrated Railz’s API solutions to augment its funding platform, access comprehensive accounting data, and provide a transparent lending process for businesses accessing growth capital from Fundsquire.

“As an early adopter of the Railz integration, we are excited to take our partnership further. We have grown tremendously in the last few years, and as a global business, we need global solutions to better serve our customers. Railz is going to be a key pillar of our evolving tech ecosystem as we continue to boost our platform in line with our growing product portfolio and customer base.” – Damien Petty, CEO & Founder at Fundsquire

With this partnership, Fundsquire sets itself apart in the global funding and fintech landscape. This platform, which has been live since early 2021, is a key step towards furthering Fundsquire’s goal in leveraging technology to de-risk lending, give customers insights into factors guiding their funding, and enable on-demand access to financial transactions and reports.

Over the past year, Fundsquire has doubled it’s investments in category-leading businesses – a rapid growth enabled by strategic expansion of funding solutions and operations along with tech development. Fundsquire recently received $75 million AUD (£40 million) strategic investment from Fasanara Capital and launched the Grant Advance funding solution.

“Railz’s Accounting Data-as-a-Service™ API partnership with Fundsquire’s funding platform aims to support Fundsquire in making the lending process transparent. It’s incredibly impactful that businesses can access quick and seamless capital through Fundsquire with the Railz integration.” – Sohaib Zahid, CEO of Railz


Find the details about the platform here

New report highlights the role of fintech in bridging financial divides in Asia Pacific

  • Asia is home to nearly half of the Top 20 global fintech hubs
  • 45 fintech hubs were identified across the Asia Pacific region – nine more than last year
  • Hong Kong, Singapore and Sydney ranked first, second and third in the Asia Pacific city fintech rankings
  • The report from findexable, powered by Mambu, includes in-depth case studies on Vietnam and Indonesia

SYDNEY, 16 December 2021: Fast-paced fintech innovation in Asia Pacific is having a measurable, positive impact on access to financial services in the region, according to a new report from findexable, powered by Mambu, titled ‘Asia Pacific Fintech Rankings: Bridging Divides’.

The report, which provides an APAC-centric deep-dive into the Global Fintech Rankings released mid-2021, highlights the vital role fintech innovation has in closing the gaps between the ‘banked’, ‘underserved’ and ‘unbanked’, particularly in countries which may have low levels of formal financial inclusion, but high levels of smartphone ownership and internet penetration.

Simon Hardie, CEO & co-founder at findexable, said: “The 2022 rankings of Asia Pacific fintech hubs are testament to the region’s diversity, ingenuity, and commitment to innovation. With 45 hubs across the region (one third more than in 2020) – fintech firms across Asia Pacific are proving fintech is the engine of the digital economy. More importantly, as this report shows, fintechs are showing that building successful businesses should go hand in hand with contributing to wider financial inclusion and development goals.”

Myles Bertrand, Managing Director at Mambu, said: “We’ve seen an astounding acceleration in the rate of fintech innovation across the region over the past year, and while some of that was a direct result of the pandemic, the adoption of new financial technologies is now being driven primarily by consumer demand. Consumers across Asia Pacific have experienced how digital banking technologies can make their lives easier, with a huge range of faster, more convenient and much less expensive ways to manage their money. So, we’re seeing a rapidly growing number of previously unbanked consumers who are now able to participate in the formal economy.”

Bryan Carroll, CEO of innovative Vietnamese digital-only bank TNEX, who was interviewed for the report, agreed with this assessment, adding: “We have customers whose annual income may be less than $2,000. These are people who, in the past, wouldn’t be able to afford banking.”

The report, which includes in-depth looks at Vietnam and Indonesia, and commentary from a number of Asia Pacific fintech leaders, identifies the countries and cities leading the fintech charge in the region, including Jakarta, which jumped 27 places in the city rankings this year, and New Zealand, which rose 15 places in the country rankings to sit inside the top 10 for the first time. Also unpacked in the report are some of the new financial technologies – particularly in the payments space – that are changing the way that people across the Asia Pacific region manage their money, where cash has been relegated from its long-held position of king.

However, while fintech innovation is increasing at pace, old roadblocks remain and new barriers arise frequently, with the report highlighting some of the issues faced by fintechs due to the region’s complex regulatory framework and the disparity in economic maturity of different countries.

“Asia is home to nearly half of the Top 20 global fintech hubs identified in the report, but the differing regulations from country to country can be a real hindrance to multinational growth in the region,” continued Bertrand. “Each country’s central bank or government has its own agenda, so it’s incredibly important for fintechs to work collaboratively with the regulators in each country to understand their concerns, and to help support the creation of mutually beneficial ecosystems that support innovation. That’s what’s going to truly drive continued improvements in financial inclusion.”

The Asia Pacific Fintech Rankings: Bridging Divides report is available to download here.

For further insight and commentary into the findings of the report, download the webinar-on-demand Fintech in Asia – Defining Success at Scale, which discusses the booming fintech landscape in Asia Pacific and  features Simon Hardie from findexable, Myles Bertrand from Mambu, Bryan Carroll from TNEX, Arvind Sankaran from AFG Partners, and Yosia Sugialam from Paper.id.


 About Mambu

Mambu is the world’s only true SaaS cloud banking platform. Mambu fast-tracks the design and build of nearly any type of financial product for banks, lenders, fintechs, retailers, telcos and more. Our unique composable approach means that independent components, systems and connectors can be configured any way our customers require to meet their customer’s needs. Founded in 2011, Mambu has 800 employees​ and ​200 customers globally, including N26, OakNorth, Tandem, ABN AMRO, Bank Islam, BancoEstado, League Data and Orange Bank. mambu.com


About findexable

Findexable is a global research and analytics firm on a mission to digitise investment in fast-growth private market fintech. Regardless of location. Using real-time mapping and indexation technology, findexable maps and scans markets, and provides latest insight on the innovators, innovations and trends in financial technology.

The Global Fintech Index is the world’s first real-time indexation of global fintech ecosystems and companies scoring the strength of fintech ecosystems globally across 85 countries and 275 cities using a proprietary algorithm and proprietary datasets via a network of global partners.

Wage advance FinTech, MyPayNow, reaches $500m lending milestone

Gold Coast based Fintech, MyPayNow, has officially lent out over $500 million in wage advances to  eligible, working Australians. 

Since inception in June 2020, MyPayNow has set out to solve the age-old problem of waiting for  payday by allowing its users to access a portion of their pay early. In only 18 months of business, the  company has accumulated over 270,000 user accounts with the app downloaded over 400,000  times.  

In October 2021, it was announced that the company would upgrade as the Principal Partner across  the NRL & NRLW teams of the Gold Coast Titans, as part of an initial landmark 3-year deal. More  recently, MyPayNow have joined the Titans’ Physical & Intellectual Disability Rugby League  Program, which is one of many community programs delivered across the club. 

“Advancing $500m in 18 months is a massive achievement and we are proud to have reached this  milestone in such a short time, with our eyes set on lending $1b by the end of next year. We have  some really exciting plans in the pipeline for 2022 and can’t wait to share the news”, said  MyPayNow Managing Director, Bronson Powe.


About MyPayNow  

The MyPayNow app provides working Aussies with the freedom to access up to a quarter of their pay early, up to $1250. The  service is quick and easy to use – once funds are requested through the app, money lands in a users bank account in minutes.  The MyPayNow app is powered by custom built AI technology, which automatically assess’ a customers eligibility and  suitability by filtering through income, expenditure and spending behavior. Once approved and money is deposited, the wage  advance (plus a small 5% fee) is paid back via direct debit

FOR MORE INFORMATION OR RESOURCES PLEASE CONTACT ANGELA CHEN, HEAD OF MARKETING –  ANGELA@MYPAYNOW.COM.AU 


 Pty Ltd | PO Box 823 | Surfers Paradise QLD, 4217 | ABN 34 635 410 909 

RSM: Australia’s R&D tax incentive Report

Research & development is a key engine of economic growth and competitiveness for many nations, including Australia.

It can develop new products or improve existing ones and improve the efficiency of an industrial process, allowing companies to survive and thrive in competitive international markets.

Australia’s R&D tax incentive – which provides a tax refund for smaller companies and a tax offset for larger companies – has a number of objectives

Firstly, the Government wants to encourage companies to carry out R&D they wouldn’t have otherwise carried out as well as stimulate economic growth through a couple of key concepts.

Secondly, it’s important for Australia’s R&D system to remain competitive, otherwise companies may take their work offshore to more tax advantageous jurisdictions. It aims to help more expensive jurisdictions better compete with others where costs and wages are lower or tax rates are preferential.

In this report, we perform a review of the last 10 years of the Australian R&D tax incentive, follow its evolution and identify areas for reform.


Download Report

GBST partners with U.S. company to inspire people to tackle debt and conquer financial goals

GBST’s Equate solution is powering five new calculators covering credit cards, savings,  budgets, loans, and repayments. The calculators are on dfree.com, a domain for the dfree®  Financial Freedom Movement, a trademark of CCCI.  

dfree® is a transformational lifestyle movement that guides people to become free from debt and  deficit, by helping them to establish funds for deposits, dividends, and deeds for a more prosperous and successful future. 

Brianna Dobing, Digital Manager at GBST, said, “We are delighted to partner with dfree and continue  building our presence across North America. Our digital tools are highly flexible, multi-currency, and  can be easily adapted to other markets and jurisdictions. 

“The calculators are designed with the dfree® Movement’s branding and encompass configurable  call to actions, which allow anyone to request to speak with a financial advisor. Working with an  organisation like CCCI has been even more meaningful for the GBST Digital team, knowing we’re contributing to an organisation that places its customers’ financial freedom at the heart of what they  do, by providing the tools that will encourage and teach them to pay off debts, save money, and  make more informed financial decisions.” 

Dr. DeForest B. Soaries, Jr., the CEO of Corporate Community Connections, said, “We chose GBST’s  Equate after conducting extensive market research. We were looking for intuitive, user-friendly calculators that could be incorporated into our marketing strategy to promote financial  sustainability. We’re excited because the digital tools are helping people assess where they are so  they can conquer their financial goals, whether it’s living within their means, setting a budget, paying off debts, investing or building an emergency fund.” 

The GBST Digital team works with financial services clients worldwide to improve brand reputation,  build brand advocacy, and enhance online customer journeys, engagement, and drive acquisition.  GBST’s customer experience experts create bespoke digital solutions for financial institutions from  calculators to portals, apps, content management systems, and more.  


About GBST 

GBST provides financial services technology to the wealth management and capital market sectors  globally. The company creates vital back, middle, and front-office technology solutions for wealth  managers, life and pension companies, global and regional investment banks, stockbrokers, and  fund managers. 

Founded in 1983, GBST works with over 100 organisations across Australia, Asia, the UK, and the US.  Its wealth management technology supports over 5.5 million investor accounts under administration,  its retail broker and clearing clients currently manage over AUD$200 billion in sponsored HIN, cash  holdings, and margin loans, and more than 60% of all ASX trading activity currently travels through  GBST’s systems, which processed more than AUD$2.2 trillion in trade value during FY2021. 

For more information, visit www.gbst.com 


About Corporate Community Connections 

Since 1997, Corporate Community Connections, Inc. (CCCI) has created connections between  corporations and underserved communities to accomplish the mutual benefits of increased access to  diverse markets and expanded community resources. From large, expanding health care systems  growing into urban areas to large financial services companies desiring to diversify their employees,  Corporate Community Connections, Inc., has been able to connect organizations to solutions and  create sustainable strategies that become embedded into the institutions.  

Additionally, the dfree® Financial Freedom Movement is a trademark of CCCI. It is transformational,  lifestyle movement that promotes financial freedom through values-based principles and practical  approaches to financial management 

For more information, visit www.corpcominc.com or www.dfree.com.


Contact
Andrew Byrne – Marketing
+61 2 9005 0922
andrew.byrne@gbst.com

Annual WeMoney Financial Wellness Survey 2021 – 2022

60% of Aussies worry about debt – 30% live paycheck to paycheck 

Australia’s leading social financial wellness platform WeMoney has surveyed 1,046 Australians to uncover their thoughts about money and gauge their overall sense of financial wellness. 

The survey found many Australians are anxious about their financial future. 

Over half aren’t confident about their current financial situation. 

Almost a third are living payday to payday. 

Heading into 2022, the cost of living and rising property prices are the top two financial fears for Aussies. 

WeMoney’s Financial Wellness Survey also found that:

  • 29.7 percent live paycheck to paycheck with more than 1 in 3 ‘just surviving’.
  • 55 percent don’t feel confident with their current financial situation.
  • 6 out of 10 worry about debt, with 46 percent doing so on a weekly basis
  • More than 7 in 10 have used a Buy Now Pay Later product.
  • Cryptocurrencies and NFTs, at 42.6 percent, are more popular than traditional stocks, at 36.7 percent. 
  • More than 4 in 10 don’t have an emergency fund with close to 3 out of 10 not planning for large expenses. 
  • Over 40 percent want their next major purchase to be a property. 
  • More than 51 percent are spending more on Christmas in 2021 compared to 2020.
  • 66.5 percent expect their largest line item at Christmas to be gifts.

“Some of our members’ attitudes towards their financial health make for concerning reading. Clearly the pandemic has impacted many people’s finances, and this was born out in a high percentage of people who were anxious about their current and future financial positions” said WeMoney’s Founder & CEO, Dan Jovevski

“On a positive note, while property prices are still a concern, the great Aussie dream of home ownership remains strong and saving is on the agenda for almost 60 percent of respondents in 2022. The survey also confirmed how far crypto has come in the common consciousness of Aussies. We believe this trend is only going to get more popular.” said Mr Jovevski. 

For the full breakdown of data and the report please visit 

www.wemoney.com.au/financial-wellness-survey 

Based on survey of 1,046 WeMoney members aged between 18-70 between November 29th 2021 and 1st December 2021. 


Media Contact
John Solvander
john@mediastable.com.au
+ 61 419 342 192


WeMoney
Dan Jovevski dan@we.money
+61 410 067 079

Why the metaverse will go far beyond Meta

NOTE: The opinion piece was first published in Nikkei Asia on Dec 7

Users will have more choice in Web 3.0 than they do on the internet today
By John Mitchell

John Mitchell is co-founder and CEO of Episode Six, a Texas-based fintech company with extensive operations in Asia.

Mark Zuckerberg did not invent the metaverse. He does not own it, either. But his decision to rename Facebook as Meta in October is likely to be remembered as the moment when this vision for a more immersive digital life went mainstream.

Naturally enough in the light of Facebook’s real-world problems, Zuckerberg’s pivot to the virtual world has opened some eyes. Nina Xiang sounded the alarm in the article “Metaverse nightmare will strip-mine our fragile human reality” published online on Nov. 18, sketching a dystopian metaverse in which Big Tech preys on humanity, making an impassioned case that governments and users should take action to prevent “a small group of unaccountable, elite tech companies” from condemning the rest of us to life in the Matrix.

Xiang will not be the only one to highlight the risk. Governments will certainly move to regulate activity including financial services in the metaverse, just as they do the real world. And, as they spend more time in virtual worlds, users should expect to be protected by tech companies.

But metaverse users will actually have more choice in what is being called Web 3.0 than they do on the internet that we know today. For sure, some of them will choose to shop and be entertained on Meta’s metaverse platforms, which will no doubt be easy to access from Meta’s empire of social media properties.

But plenty of users, especially younger ones, are already starting to inhabit a different, more decentralized kind of metaverse. It is unlikely that internet users in the future will be very interested in platforms that confine them and their digital possessions within a so-called walled garden. They will want a metaverse that is decentralized in terms of control but hyper-connected in terms of underlying infrastructure, enabling the easy transfer of value between platforms.

If you want to see the shape of things to come, look at the world of blockchain-based games. In Alien Worlds, players compete using non-fungible tokens (NFTs), earn an in-game currency called Trilium and travel on Alien World Missions in which they control competing Decentralized Autonomous Organizations, known as Planet DAOs.

It sounds far-fetched, but as many as 3.6 million people are already playing, earning, spending and trading in Alien Worlds alone. Conventional online games like Roblox boast many more active players. Roblox has around 225 million average monthly players but these are walled gardens that allow money in, but do not allow digital assets to be moved in or out.

Crucially, the currency and assets that a player holds in blockchain-based games like Alien Worlds, Decentraland, and Axie Infinity are portable beyond the boundaries of the game itself.

The emergence of this patchwork of different but interoperable platforms, rather than the giant monoliths that Xiang fears, suggests that control over economic value will shift back toward users. The use of governance tokens to power blockchain platforms could also help to decentralize control in the metaverse, addressing another of her concerns.

Thanks to NFTs, the spaceship a player owns in Star Atlas and the Small Love Potions in-game currency they have accumulated in Axie are as transferable as the car in their garage or the dollars in their pocket.

The value embedded in a digital asset can be converted into real money via cryptocurrency exchanges and then spent in real stores. Conversely, money earned from a real-world job can be converted into crypto on an exchange and brought into a game to purchase virtual land or spaceships.

Value, then, is being set free from the systems in which it was generated. And what is possible in the metaverse will surely influence expectations of what is possible back in real life.

Having become accustomed to a plethora of units of value, and their extreme portability, today’s gamers are not going to welcome a centralized institution locking their value inside any particular system, or having to use different payments infrastructure to interact with different units of value. It would seem absurd.

And if we extended the principle of extreme portability from blockchain-based games to conventional finance, the world would look very different. You would be able to take your loyalty card reward points from one chain of stores and use them at another, or convert them into cash.

You would be able to bring your crypto holdings into a wallet provided by your bank or, one day, hold your cash directly as central bank digital currency. And you would be able to spend dollars from that wallet to buy a nice apartment in Decentraland and rent it out for Ether.

Of course, regulators and brand owners will have a lot to say about this. But the revolution in value units has already begun, and will accelerate as people and value-creation migrate to the metaverse.

Axie Infinity alone has 2.23 million average monthly players, according to ActivePlayer.io, up from just over 600,000 at the beginning of the year, while research firm IDC forecasts that, by 2030, 60% of global consumers will have made a transaction using a unit of value other than a fiat currency.

That points to an urgent need for financial institutions to upgrade existing payments infrastructure to meet changing consumer expectations and regulatory requirements. There is a lot at stake here, too: $250 billion worth of payments revenue could move to non-financial institutions by 2030 if banks cannot keep up, according to IDC’s estimates.

You may not want to play Alien Worlds, but the game’s success is a sign that we can expect a decentralized metaverse with many distinct but transferable units of value, and that this paradigm will soon influence real world finance too. If you are at a financial institution, that gives you a Trilium reasons to get ready for a future with more units of value.

CreditorWatch data: Recovery to take longer than expected; Perth and Brisbane bouncing back quickest

The November 2021 CreditorWatch Business Risk Index (BRI) has revealed that business activity around Australia is currently weaker than expected, indicating that the return to pre-COVID levels is now likely to take longer than many pundits had anticipated.

The data also showed a jump in defaults, external administrations, payment arrears and court actions from October to November. However, credit enquiries rose 17 per cent, indicating that business confidence is improving.

Key Business Risk Index insights for November:

  • Australia’s economy fails to bounce back as strongly as expected post-lockdown.
  • Trade activity continues to fall.
  • Defaults, external administrations, payment arrears and court actions have jumped.
  • Credit enquiries jumped 16.6 per cent, indicating that business confidence is returning.
  • States that shut their borders but kept their internal economies going, such as WA and QLD, are seeing their metro areas bounce back fastest.
  • Melbourne and Sydney CBDs remain the worst performing capital city centres with probability of default at historic high-levels due to depressed trade activity continuing post-lockdown.
  • Credit behaviour and performance scores are improving among the hardest-hit Western Sydney suburbs including Bankstown, Burwood, Ashfield and Strathfield.

The nationality probability of default for November was flat – 5.79 per cent, compared to 5.80 per cent for October. The probability of default for Sydney and Melbourne CBDs is at record levels. The top five areas at most risk of default are:

  1. Merrylands – Guildford NSW: 7.73%
  2. Gold Coast – North QLD: 7.73%
  3. Bringelly – Green Valley NSW: 7.69%
  4. Canterbury NSW: 7.56%
  5. Coolangatta QLD: 7.50%

The number of defaults spiked higher by 53 per cent in November. Over the three months to November 2021 defaults were still down by 14.7 per cent.

CreditorWatch’s data showed that while business activity remains stubbornly depressed, it is the states that closed their borders but allowed their economic engines, capital cities and industries to continue to operate relatively lockdown-free that are now seeing the strongest bounce backs in metro areas. Meanwhile, businesses in the two cities that endured the longest lockdowns, Melbourne and Sydney, are experiencing record high probabilities of default.

“The increase in credit enquiries in November is an encouraging forward indicator of business confidence, however, there’s a long way to go before business activity is at pre-COVID levels. Worryingly, trade receivables continued to decline last month, and we also saw significant increases in defaults and administrations. Businesses in the Sydney and Melbourne CBDs in particular are at historically high probabilities of default,” says CreditorWatch CEO Patrick Coghlan.

The CreditorWatch Business Risk Index predicts the likelihood of businesses defaulting over the next 12 months across more than 300 regions around the country. The index utilises CreditorWatch’s proprietary data, combined with data the Australian Securities and Investments (ASIC) collects on more than a million local private businesses, among other variables.

Business activity remains stubbornly depressed post lockdown.

Despite the recent end to lockdowns in Melbourne and Sydney and Black Friday sales, small business trade activity remains weak. Many were hoping the first post-lockdown month would see a bump in business activity, however, CreditorWatch’s data paints a picture of a long and slow recovery.

November 2021 small business trade receivables were down 42.2% compared to November last year. Despite greater freedoms for consumers and businesses, ongoing supply chain constraints, labour shortages, cost pressures and uncertainty around emerging COVID variants are contributing to these weaker-than-expected results.

Perth and Brisbane CBDs significantly out-performing capital city peers

Western Australia and Queensland have had the strictest closed border policies throughout the pandemic, coupled with the least restrictive lockdown policies due to lower local case numbers.

This isolationist policy has had mixed results across business sectors within those states over the past two years, however, we are clearly seeing Perth and Brisbane as stand out performers over the last quarter.

In relative terms, Perth city has been the biggest mover up the BRI ranks among capital city CBDs over the past 12 months, in line with a strong performance across Western Australia as a whole, fueled by booming agribusiness and mining sectors.

Queensland is more of a mixed-bag with clear winners and losers.

As a state, Queensland has been the weakest performer over the past year, primarily driven by border closure impacts on the Gold Coast and other key tourism regions, offset to some extent by a strong performance by the agribusiness sector. However, Brisbane city has seen the largest improvement in insolvency risk and credit rating of any major city centre in Australia.

Probability of default by region

The top five regions at least risk of default are:

  1. Murray River – Swan Hill VIC: 3.69%
  2. Limestone Coast SA: 3.73%
  3. Grampians VIC: 3.75%
  4. Moree – Narrabri NSW: 3.76%
  5. Glenelg – Southern Grampians VIC: 3.80%

Why Murray River – Swan Hill?

This region scores better than average against other regions in Australia for rental and property costs, Riskscore, observed default rate and the CreditorWatch Default Rate. These factors have the largest weights and therefore influence in determining the risk of default. Other factors with smaller weightings such as the Index of Relative Social Advantage, Index of Economic Opportunity and Median Income are worse than average, while the Population Density is much better than average and together have less of an overall impact.

Top five areas at most risk of default are:

  1. Merrylands – Guildford NSW: 7.73%
  2. Gold Coast – North QLD: 7.73%
  3. Bringelly – Green Valley NSW: 7.69%
  4. Canterbury NSW: 7.56%
  5. Coolangatta QLD: 7.50%

Why Merrylands – Guildford?

All model factors for this region are below the Australian average except personal insolvency rate. The region was far worse than average for Riskscore, observed default rate and CreditorWatch Default Rate. This region was one of the hardest Western Sydney areas hit by extended lockdowns.

Probability of default by industry

Highest

  • Accommodation and Food Services: 5.25%
  • Arts and recreation services: 4.08%
  • Education and training: 4.01%

We are still seeing front-line service industries struggling to recover post lockdowns. They can’t just flick on a switch and get back to previous operations. Fortunes will progressively turn around and the December Christmas period should allow many businesses to up the ante. The education and training sector desperately needs overseas students but isn’t getting them. That is having an impact.

Lowest

  • Mining: 2.63%
  • Health Care and Social Assistance: 2.84%
  • Manufacturing: 3.00%

The mining industry is benefiting from strong commodity prices and health will be a growth industry as lockdown restrictions recede. Meanwhile, agriculture is reaping the rewards of bumper harvests and prices, but only in areas where they were fortunate enough to complete most of the harvest before the rains and floods arrived. Much of northern New South Wales, for example, achieved that.

Manufacturing in Australia is finding its legs after learning from the challenges of the 2020 lockdowns. In addition, there are positive stories in places like the M7 corridor in Sydney and parts of outer Melbourne as economies open up to foot traffic as well as enjoying continued online demand.

Payment arrears by industry 

Highest

  • Construction: 12.6%
  • Food and beverage services: 11.1%
  • Transport, postal and warehousing: 10.7%

These statistics tell a clear tale of what is occurring in the broader Australian economy. Construction was hard hit by mandatory industry shutdowns and now faces severe supply constraints in items such as timber. Food and beverage services suffered with so few businesses being fully open during lockdowns.

As people return to venues, this industry will thrive again, but there were enormous overheads to cover through the middle of 2021 and over the last two years in general. Businesses involved in transportation are being hit by strike action and global supply disruptions. A boom in online shopping is one thing, but these industries also need demand from bricks and mortar businesses, which they have not had for several months.

Lowest

  • Health Care and Social Assistance: 5.8%
  • Agriculture, Forestry and Fishing: 7.5%
  • Education and Training: 7.8%

Health Care and Social Assistance is heavily state-funded (and therefore implicitly ‘guaranteed’) and is still greatly influenced by COVID. Almost the entire agriculture industry is booming right now with some record harvests, strong demand and therefore better than usual income and cash flow. Education and Training benefits from government funding although conversely, it does traditionally display high rates of default.

Defaults 

The number of defaults spiked higher by 53 per cent in November, albeit that is not a seasonally adjusted number. It is a preliminary sign that Small and Medium-sized Enterprises (SME’s) are engaging with a post-lockdown period that isn’t entirely comfortable. It will be important to track how the number of defaults fares in approaching months.

Defaults are like other key contemporary CreditorWatch indicators such as external administrations and the number of court actions. While not seasonally adjusted, spikes of 15 per cent and 85 per cent in November, respectively, for these two measures simply can’t just be ignored.

Defaults are like other key contemporary CreditorWatch indicators such as external administrations and the number of court actions. While not seasonally adjusted, spikes of 15 per cent and 85 per cent in November, respectively, can’t just be ignored.

We may be on the cusp of SMEs facing the commercial reality of a post lockdown environment.

Court actions 

As noted above, the number of court actions spiked by 85 per cent in November, in original terms. Over the November 2021 ‘quarter’ court actions increased by 21 per cent to be up by 27 per cent compared to the same period last year. The number of court actions is at its highest since March 2020 and possibly signals a path back to normalised proceedings.

External administrations

The number of external administrations was up 15 per cent in November, the second consecutive monthly increase. This result follows consistent falls from June in the lockdown periods. We need to observe far more evidence before calling a post-lockdown return to normality, but events are moving in that direction.

Credit enquiries

The number of credit enquiries jumped by 17 per cent in November. This is the largest monthly increase since March. Over the November ‘quarter’, credit enquiries rose by seven per cent compared to the same period in 2020. We’re a long way off from cooking the roast, but a continued improvement in credit enquiries would provide a key leading indication of better business conditions and consequently overall economic activity.

Business turnover 

Business turnover continued to decline from October to November. On an annual basis business turnover dropped by 42 per cent in November, the twenty second consecutive drop and the sharpest during that time. This is a sign that the recovery will be protracted and very uneven across industries and geographical jurisdictions.

Outlook 

The economy is coming back from the contraction of the September 2021 quarter, but we are unlikely to see a consumer-led recovery where households begin spending the $400 billion in savings they have accumulated on a grand scale. The recovery will be patchy and will take time, although we will almost certainly avoid another contraction in Gross Domestic Product (GDP) in the December 2021 quarter. Off a positive base, the economy is expected to continue growing in 2022.


Media Contacts:
Hayley Schubert
Sling & Stone
hayleyschubert@slingstone.com 
0431 651 418

Mitchy Koper
GM Communications and Marketing, CreditorWatch
mitchy.koper@creditorwatch.com.au
0417 771 778


About CreditorWatch

CreditorWatch is a digital credit reporting agency, headquartered in Sydney. From sole traders through to ASX listed companies, more than 50,000 Australian businesses now use CreditorWatch to make affordable, informed credit decisions, avoid high-risk customers and ensure they get paid on time. CreditorWatch customers can easily search for and monitor the credit history, court actions, payment defaults and insolvency notices associated with any business entity in Australia (including sole traders, trusts and partnerships) giving them an incredibly accurate picture of the risk posed to their business.


The company was founded in 2011 and has offices in Sydney, Melbourne and Brisbane. Find out more at www.creditorwatch.com.au.

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