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Enterprises turn to startups for innovation

Adam Bender | Nov. 1, 2013
ANZ says startup initiative gives bank early access to new ideas.

A growing number of big Australian companies are seeking partnerships with startups to stay innovative.

Several major Australian enterprises are partnering with startups or running startup accelerator initiatives, including Telstra (muru-D), Optus (Innov8 Seed) and ANZ bank (Innovyz).

"In our view, one of the key ways to grow is to focus on startups," says Nick Reade, ANZ bank general manager of small business banking. "It's a segment that is interesting from the perspective of getting access to ideas."

ANZ does not appear to be the only Australian enterprise with that view.

Telstra CIO Patrick Eltridge recently said that working with startups is a "strategic necessity" for Telstra. "We are way beyond the point where we build all this stuff ourselves," the CIO said. At the Future of Payments conference earlier this month, an HSBC official said that banks are increasingly seeking partnerships with startups as their attitude has changed from "a small-y 'yes' to a capital-Y 'Yes'."

Bosco Tan, co-founder of the startup finance website Pocketbook, said he has seen a sea change in enterprise attitudes toward startups.

Pocketbook is a website that lets users visualise transactions from all of their bank accounts, similar to Mint.com in the US. Making it work has required partnerships with Australia's top banks.

"Certainly from the discussions we've had, it is very much the case that big companies are more receptive," said Bosco Tan, co-founder of finance website startup Pocketbook.

"I think there is more understanding in large companies now around the principles of disruptive innovation and the lean startup."

Reade says ANZ has been focussing on startups for the past five years, though the initiative has ramped up in the past two. The ANZ-sponsored Innovyz START accelerator program opened its doors in 2012. In April this year, the bank made a one-year, $1 billion pledge to lending money to startups. In the first six months, ANZ has lent $750 million.

ANZ recently announced a partnership with Ingogo, a startup that makes a mobile app for hailing cabs. The alliance will place payment terminals in cabs.

"At the end of the day, we're a massive organisation," says Reade. "We're doing a lot of innovative things, but we recognise that the startup market comes with a whole lot of really smart people with really great ideas.

"ANZ will get the first opportunity to work with some of these smart companies and some of their ideas because we're involved."

Working with startups provides "access to thought leadership and innovation earlier than you would get yourself ... Rather than build it ourselves, sometimes partnering is easier and quicker and cheaper."

Telstra is likely getting involved with startups for the same reason, says Reade.

 

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