UK’s Railsbank spurs embedded finance in Australia

1 December 2021

Railsbank is a pioneer of embedded finance technology. The company helps clients to launch new financial products and simplify financial transactions. Railsbank does this by providing its specialist technology as an outsourced service.

Railsbank launched in Australia in March 2021. In this case study, Ben Smith, General Manager for Australia at Railsbank offers insights into the company’s progress in Australia, including:

  • the emergence of embedded finance and its future in Australia
  • how the company partnered with Australia’s first neo-bank, Volt
  • support from trade-promotion agencies including Austrade.

The new embedded-finance market

‘Embedded finance’ has gained global traction in recent years. The term describes how specific banking functions are now packaged as an outsourced service to companies that need to process financial transactions.

This outsourced service is called ‘banking-as-a-service’ (BaaS). New fintechs are attracted to BaaS providers because it helps them to compete effectively with established banks.

‘This [BaaS] helps new players to launch and scale-up financial products,’ says Smith. ‘By using our technology, they can stay focused on nurturing customer relationships and delivering a superior experience.’

Recent regulatory changes have encouraged the emergence of BaaS in Australia. And BaaS-enabled embedded finance is forecast to grow fast.

UK embedded finance co. partners with Australia’s first neobank

The company partnered with Australia’s first neobank, Volt, and launched as ‘Railspay’ in March 2021. Railspay quickly signed up a spate of new fintech customers.

‘With a partner like Volt, we are able to access local market knowledge,’ says Smith. ‘When added to our global experience, this enabled us to deliver a world-class product for the Australian market.’

Consumer Data Right laws to power open banking in Australia

Smith says that the landscape for fintechs in Australia has many similarities to the UK. He forecasts that open banking will take off in Australia following the recently enacted Consumer Data Right (CDR) legislation. 

‘Australia is on our radar as a strategic market for strengthening our presence in the region,’ he says. ‘The financial services industry is changing dramatically across the globe. The change has been rather pronounced in the last couple of years, and this is just the beginning.’

A natural partner for London fintechs

Austrade’s fintech adviser in London, Andy Thompson, says the Australian market provides great opportunities for many UK fintechs. He cites companies such as Revolut, GoCardless, Wise, 10x and Truelayer. All have successfully launched new services in the Australian market.

‘Australia provides the opportunity for UK fintechs to test, launch and scale new products and services without the risk of an unfamiliar regulatory or legal system,’ says Thompson. ‘They encounter strong business and consumer demand in Australia — and an appetite for digital technology.’

The UK–Australia FinTech Bridge

One reason for fintech interest in Australia is a formal government-to-government agreement. This is the UK–Australian FinTech Bridge, which was signed in March 2018.

The bilateral agreement is designed to help the Australian and UK governments collaborate on fintech policy and regulation. It smooths the flow of fintech trade and investment between the UK and Australia. And it is designed to encourage new commercial partnerships.

‘The UK–Australia FinTech bridge helps to create a regulatory environment that is open to fintech innovation,’ says Thompson. ‘The bridge is not just international collaboration – it’s also about regulators partnering with industry to help pilot new services.’

Austrade helps UK fintech to navigate licensing

Smith reports that Austrade helped Railsbank to set up in Australia.

‘Austrade helped us understand the regulatory framework in Australia during our exploratory phase,’ says Smith. ‘They also introduced us to a number of legal advisors who helped us through license-application formalities.’

Smith says that this was a particularly tricky phase of his company’s growth journey. This was because of the chaos and restrictions triggered by the pandemic.

‘The on-the-ground support we got from Austrade was exceptional,’ he adds. ‘The UK Department of Investment and Trade worked collaboratively with Australian state governments, and that – too – was exceptional. They have supported our foray into Australia.’

For more information

To find out how Austrade can help global fintechs invest in Australia, please visit the Austrade fintech hub.

Alternatively, please contact FinTech Australia.