Exclusive: The opportunities and challenges for Kiwi tech companies
Recently IT Brief had the opportunity to discuss Kiwi Tech businesses and the challenges they face with Augen Software Group director and NZTech chair Mitchell Pham.
What are the opportunities and challenges for technology businesses in New Zealand at the moment?
Today, we live in a digitally connected world, where there is global demand for solutions to a wide range of problems, and growing digital economies with rapidly increasing appetite for new technology applications. Combine this with the fast emergence of many exponential technologies such as artificial intelligence, machine learning, blockchain, etc. and established ecosystems such as that in New Zealand, Kiwi businesses are facing an endless landscape of opportunity for innovation.
What's more, every industry sector is experiencing rapid change and adopting technology innovation as the way forward - whether to adapt to change or to seize the opportunity to lead in their space, or simply to accelerate growth or scale globally - from financial services to healthcare, from education and training to transport and logistics, from professional services to manufacturing, etc. - all of this present huge opportunities for Kiwi technology businesses.
However, the barriers that I see most often when engaging with technology businesses in New Zealand revolve around lack of access to:
- Tech talent
- Investment capital
- Large customer markets
Many Kiwi companies that I know start in NZ but innovate for the global market, supplying new innovation to the global demand for solutions to problems. However, while we supply to the global market, these companies often struggle in drawing from the limited domestic pool for a combination of the above, in order to grow and advance. These are significant barriers.
To overcome these barriers by reaching outside of New Zealand, many of our companies also lack capabilities for international collaboration - such as cultural intelligence, structural maturity or market readiness to engage with foreign entities. New Zealand's DIY (do it yourself) culture and is a great enabler for invention, but at the same time, it is a self-imposed barrier for commercialisation, speed-to-market and going global.
What is the government doing well to encourage tech sector development, and what more can be done? The New Zealand government is very involved in addressing the above challenges at the macro level while at the same time supporting a wide range of industry-development initiatives.
The latest example is the ground-breaking work of NZTech and NZTE with the UpStarters campaign, recently launched by Prime Minister Jacinda Ardern. This is a key milestone in government supporting tech and innovation companies to promote ourselves on the world stage.
The UpStarters story was created to form a compelling, consistent and coherent way of sharing New Zealand’s tech and innovation capabilities internationally. Over time, this story will help build New Zealand’s reputation as a credible source of world-class innovation and technology solutions.
UpStarters has been designed to help New Zealand firms explain how they come from a country with a history of innovation and to stand on the shoulders of those that have come before them – such as splitting the atom, inventing the electric fence and the plastic syringe.
This is one example of the industry-led government-supported approach that works well for growing the New Zealand technology industry. And of course, there is always more to do.
As a technology entrepreneur who has travelled extensively throughout Asia, the lack of knowledge of Kiwi tech ingenuity is a constant frustration for me. There’s almost no place in the Asian region where I can use the NZ Inc. brand to help position a tech business as being from a well-known high-tech export nation.
New Zealand has invested heavily in promoting education and tourism for decades, which is why we are so well known in Asia for these industries. It’s time we make an ongoing investment into promoting the fastest growing sector of our economy. The sooner the better, as it will take time to build brand association between NZ and high-tech nation.
What can community stakeholders do to help one another grow and develop?
New Zealand has nearly 29,000 technology businesses. These individual companies will thrive as the whole industry becomes more connected, better promoted and further advanced, both domestically and internationally.
Much synergy and many opportunities are generated when members of the tech sector come together - to connect with each other, promote everything that everyone is doing, and combine voices and work together to continue to advance the whole ecosystem for the industry to keep growing, both at home and on the world stage.
At the same time, while the New Zealand tech sector continues working on its own growth, it is rapidly coming together with the other sectors to accelerate growth for those sectors across the rest of the economy. Examples accelerated growth can be seen where technology comes together with financial services (FinTechNZ and InsurTechNZ), education (EdTechNZ), creative (CreaTechNZ) and primary industries (AgriTechNZ), to name but a few.
NZTech today is an alliance of 20 tech communities, with many more emerging from or in the process of joining the alliance. These communities share a common purpose of connecting, promoting and advancing the New Zealand technology ecosystem to help the tech sector and the economy grow.
As more tech communities come together and their memberships continue to grow, more synergy and opportunities will come out of individual stakeholders engaging with everyone else across the whole ecosystem.
What are the biggest challenges NZ businesses face when entering the Asian market, and what are the solutions/resources available to them?
There are many challenges that Kiwi tech companies face when entering markets in the Asian region. At the macro level, New Zealand is not yet well known in Asia for being an innovative high-tech exporter. This is a significant challenge that will take time to overcome.
At the micro level, challenging areas include market presence, engagement capabilities and the ability to deliver with the necessary scale for the target markets. This is why it makes sense for Kiwi companies to collaborate - and perhaps leave behind the DIY culture that may be part of their innovation DNA.
There are many opportunities to engage Asian markets through local partners or to collaborate with other Kiwi businesses who have been present in the region for a long time. These companies tend to have many of the important and necessary 'assets' or capabilities that could be leveraged through partnering relationships.
Such important assets/capabilities may include: in-market presence, well-developed reputation, knowledge of the local business ecosystem, experience in operating in-market, local business and government networks, understanding of local culture and regional dynamics, strategically located offices/facilities, critical mass in size or volume, the required human capital and business culture that work well in-market/region.
For the above reasons, Kiwi companies such as Augen Software Group and facilities such as Kiwi Connection Tech Hub in Ho Chi Minh City are working together with more and more New Zealand tech companies to accelerate presence and engagement in Vietnam and the ASEAN region. This ties back to addressing the challenges that come from our inherent lack of tech talent, investment capital and large customer markets in our own economy.
How do you think open banking will affect the development of FinTech in New Zealand?
Open-banking means a wide range of things in different financial ecosystems. In New Zealand, it is seen as an opportunity to demonstrate how incumbent financial services institutions can partner with technology companies to bring new propositions to consumers and businesses. Connectivity to data and payment infrastructure is an important element in re-wiring the New Zealand financial services landscape.
What needs to happen in New Zealand before open banking can become a reality?
The next 12 months represent an open banking inflexion point for the New Zealand financial services industry. Minister Kris Faafoi (minister of commerce and consumer affairs) has given the industry 12 months to show significant progress towards meeting the principles of open banking - as outlined in the Australian approach.
We have an opportunity to achieve these desired open banking outcomes a different way in New Zealand - leveraging trusted brands with new technologies to power these experiences. FinTechNZ has a significant part to play in facilitating this collaborative approach.