Stone & Chalk CEO Alex Scandurra has been spruiking the Sydney-based fintech hub ahead of its official launch next week in what will be the biggest test yet for Australia's start-up ecosystem across the financial services industry.
While Stone & Chalk will officially open its doors on 25 August, the full magnitude of the task at hand has been outlined in a research white paper released by the Australian Information Industry Association (AIIA).
Speaking at the recent launch of the report - Collaborating for growth: Finding co-innovation models that work for corporates and startups alike - Scandurra said that despite only being back in Australia for six months, he had heard "some absolutely shocking stories" of start-ups having conversations with established companies "where the idea is then taken internally (by the established company) and delivered to market".
"There is probably no better way to kill your reputation as an organisation than doing exactly that," he warned. "The start-up community here is still quite small and, even if it was ten times the size, they are a very close-knit community."
In his experience, Scandurra noted that those large companies that get it right have fintech leadership that comes from the top and is mandated throughout the organisation.
"Then innovation becomes a core of the organisation's operations as opposed to a nice thing on the side. That's the kind of approach that success brings and anything short of that and you're just exposing your organisation to potential reputational risk as well as embarrassment, both externally and internally," he said.
According to the AIIA research, which was prepared by Fusion Labs, successful companies know that the best opportunities may not lie within their corporate boundaries.
In fact, they know that only looking inside their organisations for innovation may restrict their thinking to "business as usual". A white paper on innovation further noted that in the last three years the Australian start-up ecosystem had undergone something of a transformation.
Three years ago, the AIIA released a white paper examining how start-ups can innovate with large corporates in Australia.
The results had a number of implications, most significantly, a loss of intellectual capital in Australia, as start-ups fled to other markets where the risk/reward trade off of working with larger companies was more favourable. However, much has changed since 2012.
"The Australian start-up ecosystem is extremely vibrant, it has proven its legitimacy as a source of game-changing innovation, and companies have finally realised that digital disruption of traditional corporate business is a reality that cannot be sidelined," stated the white paper.
'Raw, lean innovation in action'
According to the report's author, Patrick Crooks of Fusion Labs, large companies are now clamouring to engage entrepreneurs and start-ups, and looking to entrepreneurial communities to find ideas, opportunities and people.
"It’s inspiring for large organisations to see raw, lean innovation in action," he said. "While this is a very positive trend, there are significant hurdles that need to be resolved before big business can really integrate with start-up culture in a mutually beneficial way."
The challenge for Stone & Chalk is to use the increasing amount of data showing that the majority of significant innovations are coming from outside normal corporate structures to convince large organisations to change their approach.
"If companies want to sustain themselves, they need to be actively pursuing open innovation strategies," said Crooks.
"Finally, at a personal level, entrepreneurial environments are just really invigorating and inspirational places to spend time.
People who genuinely want to work with entrepreneurs are tackling some of our more profound problems.
"By picking the right models, and following some simple rules for collaborating with start-ups, companies will realise even more sustainable benefits across all of these dimensions."