Australian Economy

Fintechs profit from tough economic times

But with those two elements now in the rearview mirror, things are getting back towards normal.

“We are seeing a return to more normal volumes of work, before what we expect to be a significant uptick in work with interest rate rises and cost of living increases.”

More demand, fewer providers

At the same time, less debt is being sold to debt purchase providers, and the number of contingent collectors like Credit Clear in the industry has shrunk through consolidation, he says.

“There is more demand for our services and less providers able to do the work.”

Credit Clear provides an end-to-end service from its white-labelled AI-driven digital platform, which collects debts in the name of its client. Smith says there are also collection activities with agents in its Australia operations centre. The group also undertakes legal recoveries through Oakbridge Lawyers.

Revenue is derived from a variety of sources including software-as- a-service (SaaS) fees for the digital platform, commission, and fee for service arrangements.

Smith says the industry is experiencing a wave of digital transformation and Credit Clear is on the front foot in onboarding clients and migrating their business into SaaS services with higher engagement and collection rates because of its AI-driven technology.

Being a company listed on the ASX has its pluses and minuses, and the roller-coaster ride of 2022 has meant a rethink by many investors about valuing tech-related stocks.

“Fast growth technology companies that were pursuing revenue growth at all costs have not been able to access the same capital at the same valuations as before,” Smith says. “Profitability and cash flow have again become paramount.”

After the acquisition of ARMA, Smith says the enlarged group has a focus on profitability and growth.

He says in the September quarter, Credit Clear achieved its first cash flow-positive quarter, and secured new business. It raised capital in July this year and December last year.

Smith says Credit Clear has a big focus on data security.

“We have always appreciated and respected the sensitive nature of customer information provided to us, the trust of our clients and the vulnerable position of their customers” he says.

While their names are confidential, the group works for some of the largest
corporate and government organisations, and their demands are for best practice across the board, he says.

Selfwealth sees buying opportunity

Cath Whitaker, the chief executive of Selfwealth, another Fast 100 company, says the sharemarket trading platform has more than $8 billion of asset value on its platform, and is a credible alternative to the big four banks’ wealth and trading platforms for retail investors.

Selfwealth charges a flat fee of $9.50 for trades on the ASX.

Whitaker says the group has 125,000 active Australian retail investors on its platform. She says more investors are keen to invest offshore, and about 33 per cent of its retail investors have US trading accounts.

“Australian retail investors are becoming more and more confident with international exchanges, especially the US, and over a third of our retail investors have US trading accounts,” she says.

She also expects Hong Kong trading, which the group offers, will grow in
popularity.

The sharemarket volatility of the past few months has brought about some interesting trading patterns. Heavy rises in official interest rates by central banks around the world trying to curb runaway inflation are traditionally bad for sharemarkets.

Selfwealth chief executive Cath Whitaker.  Eamon Gallagher

“There has been an industry-wide slowdown of retail equity volumes,” Whitaker says.

“However, given Selfwealth services a broad demographic of retail investors including SMSFs, over the last quarter our buy-to-sell ratio of value of trades is still heavily skewed to buy, meaning Selfwealth clients do see the current market as a buy opportunity.”

The company has a motto of being here for “decades, not days”, and has a sustainable business model.

Selfwealth makes money on flat fee brokerage, FX on international currency to support international trades, and interest on cash.

Whitaker says being an ASX-listed company gives investors a transparent and clear view of where the company is headed.

“Selfwealth works hard to communicate to our investors our growth vision. There is a massive opportunity for an innovative, Australian-owned company to lead the way on retail investment.”

She says many of its rivals are privately owned, and there is no view on financial viability, “which should be a concern if retail investors’ equities and cash are being held”.

Whitaker says cybersecurity has been, and will continue to be, a big priority for Selfwealth. “Any Australian business, big or small, should be focused on this,” Whitaker says.

The 2021-22 annual report shows revenues were up 10.4 per cent to $20.2 million, but there was a bottomline loss of $6 million-plus. Whitaker says in 2020-21, Selfwealth was cash-flow positive, which proved its underlying business model worked.

She says in 2021-22, Selfwealth focused on investing for growth and made an extra $6 million investment to beef up functionality, attract new clients, and build up education content on the platform.

The world is your oyster, says TWIYO

TWIYO Capital, a company included in the Fast Starters list this year, is a corporate advisory group with an unusual name – with the letters in the acronym spelling out “the world is your oyster”.

The two founders, Stuart Cook and Ryan Barnes, were consulting separately on the same projects in 2018 and 2019 and set up the business and brand in 2020.

Barnes says “the world is your oyster” is “an expression that embodies our utopian approach to life and business”.

The group has an optimistic outlook and takes ESG issues very seriously. “Without listing them specifically, there are many sectors we would not work with due to their negative impact on the planet,” he says.

The group has an ethos of “positive change”, which Barnes says involves businesses and entrepreneurs leaving the world in a better place than how they found it.

“While this could be interpreted broadly, we do indeed apply this framework rigorously when considering partnerships, new business and with our team”.

Ryan Barnes and Stuart Cook., partners in corporate advisory group Twiyo.

Ryan Barnes and Stuart Cook., partners in corporate advisory group TWIYO. 

TWIYO has a three-pronged approach. It has a traditional consulting business that focuses on early-stage corporate advisory assignments and Virtual CFO programs.

It also has a private investments vehicle, which houses shares in businesses from the work it does with start-ups which are part-paid in equity.

It also runs an Active Fund business, where TWIYO opens and operates businesses in its own right. The first focus is on health and wellness gyms in Sydney.

“We are flexible in our approach and will combine traditional fee-for-service models with potential equity arrangements to suit the precarious nature of the market we serve,” Barnes says.

With the RBA having lifted interest rates aggressively, and energy bills and inflation rising for companies across the spectrum, Barnes says there is extra demand for the group’s services.

“What has become clear is that our clients need us more during periods of uncertainty. So with so many costs increasing for business owners, it is of greater importance to have strong governance around your financial performance and your internal controls.”

He says it’s often the case “that it is not just about increasing your price, or reducing your costs in these periods as a way of persevering through this time, there are often larger and more strategic moves that must be made”.

TWIYO has specific skills in advising earliest-stage businesses, which some firms steer clear of. Barnes says this can “add immense value at this stage and forge long-term relationships”.

It is aiming to forge deeper links in three main categories in its corporate advisory business – health and wellbeing, sustainable food and beverage, and impact innovation.

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