Australian small cap investors should turn their focus to the increased use of technology across the financial services sector, and the investment opportunity it presents, according to DNR Capital.
DNR Capital’s Australian Emerging Companies fund portfolio manager, Sam Twidale, said traditional financial services companies in Australia had long benefited from favourable regulation, limited competition and captive customers, but as change sweeps the industry, investors could be gaining exposure to new opportunities.
“We are witnessing this change now as new business models emerge adopting the latest technologies, with today’s tech-savvy customers receptive to change,” he said. “In the Australian small cap sector investors can gain exposure to these niche opportunities, which is not the case in the ASX 100, which comprises the larger incumbents being disrupted.”
Twidale said he also expected that the mandated introduction of open banking on 1 July 2019 would have important implications for the Australian financial services landscape, accelerating the level disruption.
“We expect a range of new innovative products and services to arise to take advantage of open banking, with greater availability of data providing opportunities for Australian FinTechs to thrive,” he said.
Twidale singled out Afterpay Touch Group as one of the companies to benefit from the transition to open banking.
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