startup secrets: how australia can create new … startup secrets: how australia can create new...

A report into the outcomes of the inaugural National Fintech Cyber Security Summit and opportunities for Australian industry and government to create startups by fostering collaboration between the financial services and cyber security sectors.

STARTUP SECRETS: HOW AUSTRALIA CAN CREATE NEW BUSINESSES WITH FINTECH AND CYBER SECURITY INDUSTRY COLLABORATION

b Startup secrets: How Australia can create new businesses with fintech and cyber security industry collaboration

PLATINUM SPONSOR

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FOREWORD 2

GET INVOLVED WITH AUSTRALIA’S NASCENT CYBER SECURITY INDUSTRY 3

EXECUTIVE SUMMARY 4

INTRODUCTION 5

COLLABORATION CALLS: DEVELOPING A CYBER SECURITY INDUSTRY 6

Summit outcomes tackle practical building blocks 7

Startup engagement for corporate gain 10

ESTABLISHING AUSTRALIA AS A REGIONAL FINTECH-CYBER SECURITY INNOVATION HUB 11

Become startup ready with an innovation program 11

Customers trump funding 13

AUSTRALIA’S CYBER SECURITY, FINTECH INNOVATION PLATFORM 15

Financial services driving demand 15

Starting on the right foot 16

Learning by observation: Israel 17

APPLICATIONS WHERE FINTECH AND CYBER SECURITY MEET 18

CONTRIBUTE TO AUSTRALIA’S CYBER SECURITY DEVELOPMENT 20

ABOUT THIS REPORT 22

National fintech cyber security summit highlights industry opportunities 23

Summit timing ideal to spur collaboration 23

CONTENTS

2 Startup secrets: How Australia can create new businesses with fintech and cyber security industry collaboration

Cyber security is the foundation of our information economy and is growing more critical as government and industry rapidly expand digital initiatives. Australia’s financial services sector is world-leading in its robustness and adoption of emerging trends such as mobile payments, cloud computing and data analysis. All this is underpinned by trust in the information that is transmitted through and stored in digital systems.

Without world-class cyber security trust in our ability to perform reliable financial transactions will erode, as will our confidence to develop new products and services for business and consumers.

When the Prime Minister announced the National Cyber Security Strategy in April a fundamental aspect was increasing the collaboration between industry, research and government agencies. To better respond to threats and support the growth of the local cyber security sector. We are a nation of innovators, but too often our bright ideas are captured and commercialised by larger companies based overseas. Startup secrets is a great example of our willingness to work together to develop an industry to satisfy a growing need for our economy.

Startup secrets is a long-overdue, practical guide aimed at changing the tide of too much reliance on imported technology and not enough support for our local tech startups.

Take some time to review how cyber security impacts your organisation and how it is best placed to get involved with this important turning point for Australia’s commercial future.

Alastair MacGibbon

Special Adviser to the Prime Minister on Cyber Security

FOREWORD

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GET INVOLVED WITH AUSTRALIA’S NASCENT CYBER SECURITY INDUSTRY

Australia is embarking on an unprecedented industry building program. More statistics are not required to prove to you what we already know – cyber security is now a mainstream need for every business and individual in Australia.

Despite this requirement, we buy most of what we need from overseas making us highly dependent on others for the protection of our most critical information. The same way we don’t outsource our military to foreign companies, we need to build a strong information protection industry locally.

Many of those that attended the National Fintech Cyber Security Summit roundtable in May agreed we have the talent and collective ability to create a viable industry; however, we have lacked focus and prioritisation.

To overcome these hurdles, we have created a national cyber security innovation program led by demand from the financial services sector and aligned to the federal government’s recently announced Cyber Security Growth Centre initiative.

We designed the innovation program in three phases, the first of which was the May National Fintech Cyber Security Summit, VIP roundtable and dinner series.

The next phase – which begins with the publishing of this report – is the launch of a National Fintech Cyber Security Design Challenge. This will bring together key organisations seeking to collaborate with tech startups and researchers from across the country.

The final phase will be the launch of the Cyber Security Innovation Lab where startups and researchers will work alongside corporates and government agencies to create and commercialise new developments in fintech-led cyber security.

If your organisation wants to be a part of creating a new cyber security future for Australia, either as a creator or consumer of our untapped innovation, then we encourage you to join our program. Without leaders like you, we can’t make this happen.

Help us champion this opportunity and lead the way towards an exciting new industry that will contribute to addressing the current and emerging global cyber challenges.

Representatives from CSIRO’s Data61, Stone & Chalk, KMPG and the Australia Israel Chamber of Commerce.


EXECUTIVE SUMMARY

Startup secrets: How Australia can create new businesses with fintech and cyber security industry collaboration is part of a national program aimed at maturing Australia’s cyber security and fintech industries to establish a leading hub for innovation and product development in the Asia-Pacific region.

The sponsors of this report are establishing the infrastructure to foster collaboration between industry and government to turn fintech and cyber security startups into larger companies capable of selling to, and supporting, Australia’s larger corporate customers. And the companies we create will be globally relevant for taking on this global problem.

Intended for business and technology leaders in the financial services industry, corporate ICT, technology startups, academia, government agencies and research bodies, this report provides necessary guidance for collaborating with other supporting organisations for a wider economic benefit to Australia.

• The inaugural National Fintech Cyber Security Summit held in May was the first stage of a broader program to establish Australia as a regional hub for fintech and cyber security collaboration and innovation.

• The summit identified next steps for industry development including courses of action for expanding government frameworks, real-world problem solving, structured information sharing, innovation program bridges, startup co-creation, executive-level awareness and venture funding.

• For phase two, a national fintech and cyber security design challenge for financial services will be held. Organisations are now invited to become a partner and to contribute via collaboration, startup mentoring and investment.

• Phase three will see the launch of the Cyber Security Innovation Lab where startups, researchers and entrepreneurs can work alongside larger corporate and government organisations to create and commercialise new ideas in cyber security and fintech.

• Critical success factors for this program will be largely dependent on four things: the funding requirements are met for it to be successfully run; sufficient priority is placed by participants; a commitment to commercially partner with startups; and a clear focus on the problems we’re trying to address together.

• Cyber security impacts every organisation across all industries and businesses of all sizes can get involved in this industry development program as the growing sophistication of threats have not been solved by the market sufficiently well enough. Benefits to corporates range from new approaches to problem solving and better internal innovation to skills retention, procurement cost savings and a roadmap to prepare for potential industry disruption – not simply creating ‘more products’ for the sake of it.

• Australian businesses need to become startup ready within their own innovation activities. The summit’s main call-to-action found a need for more collaboration where corporates and governments agencies must look at branching out their own innovation programs to include startups outside their organisations, which in turn benefits industry development.

• For many startups working to get a product or service off the ground, corporates can offer immediate help by bringing them on board as a supplier – it is a misconception startups are only interested in funding. Startups are also a good way for corporates to access innovative approaches to the cyber security threat landscape.

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This report is a guide to the potential for new cyber security and financial services technology, research and industries in Australia resulting from collaboration between industry, startups and government agencies.

In May 2016 CSIRO’s Data611 and Stone & Chalk, in conjunction with partners KPMG and the Australia-Israel Chamber of Commerce (AICC), held a one-day National Fintech Cyber Security Summit. The summit’s objective was to provide an opportunity for the fintech industry to take the lead in cyber security innovation and to advance industry development through generating dialogue between research, government, industry and startups. It also presents an opportunity to raise awareness of the collaboration opportunities for the purposes of establishing a fintech cyber security capability in our region.

This partnership is the first step of a fintech cyber security innovation program and the summit’s objective aligns and supports the Australian government’s cyber security strategy formally announced by Prime Minister Turnbull in April 20162 – by establishing a fintech-led cyber innovation hub that incubates innovative tech start-ups focused on addressing current and future cyber security challenges.

This report seeks to inform decision makers of the importance of collaboration and support for nurturing the intersection of local fintech and cyber security development capabilities, and share practical advice on how to get involved with industry development.

INTRODUCTION

1 Data61 was born from the merger of NICTA and CSIRO’s Digital Productivity business unit.

2 https://www.pm.gov.au/media/2016-04-21/launch-australias-cyber-security-strategy-sydney


COLLABORATION CALLS: DEVELOPING A CYBER SECURITY INDUSTRY

While there may be pockets of strong cyber capabilities within the private and public sectors, the best way for Australia to catch up and lead regionally is to collaborate on value creation.With both supply and demand-side organisations helping to create and nurture cyber startups there is opportunity to collaborate on commercialisation opportunities – high potential startups and scale-ups in the immediate term and research organisations for the longer term.

“Cyber security doesn’t have geographic boundaries. It is a team sport and we need to pull together and lift the scale of our ambitions to create an industry and work faster. Let’s pull together, aim higher and work faster”

Adrian Turner, CEO, Data61

• DEVELOPMENT OF A CYBER SECURITY INDUSTRY CANNOT BE ACHIEVED BY A SINGLE ORGANISATION AND MANY FACETS ARE REQUIRED TO BUILD THIS CAPABILITY IN AUSTRALIA.

• AUSTRALIA MUST START BY BUILDING ON WHAT IT HAS TO ADDRESS THE SPECTRUM OF SHORTCOMINGS OF ITS DISPARATE INDUSTRY CAPABILITY. COLLABORATION IS IMPERATIVE.

• THERE ARE MANY BENEFITS CORPORATES STAND TO GAIN BY ENGAGING WITH TECH STARTUPS – FROM COST SAVINGS TO BETTER INTERNAL INNOVATION PROGRAM OUTCOMES.

• STARTUPS CAN HELP CORPORATES RETHINK APPROACHES TO COMPLEX PROBLEMS AND ACCESS ENTREPRENEURIAL TALENT THAT EXISTS OUTSIDE THEIR ORGANISATION AND BUREAUCRACY.

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INDUSTRY ALIGNMENT WITH THE CYBER SECURITY GROWTH CENTRE

A primary objective of the recently announced Cyber Security Growth Centre is to accelerate the creation of a vibrant and globally competitive, domestic cyber security industry. The proposed cyber security innovation programme & design challenge, which is being developed in collaboration with the financial services industry, Data61 and Stone and Chalk strongly supports the Growth Centre’s objectives. The Design Challenge will align with the thematic areas identified by the community and coordinated by the Cyber Security Growth Centre.

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Developing a cyber security industry is not something which can be achieved by a single organisation and there are many ingredients required to build a strong cyber security capability in Australia for it to become a leader in the region.

Research and development, startup commercialisation, government programs, corporate support and a change to organisational and team mindsets must come together to form a capable ecosystem to meet the requirements of buyers.

Australia’s Chief Scientist, Dr Alan Finkel, who also attended the summit, concurred cyber security is a critical, growing field with enormous potential. Potential that will only be realised with more commitment, collaboration and innovation.

“It is important Australia rises to the challenge and opportunity that cyber security presents,” Finkel says. “If we want to enjoy navigating a free and open Internet, we need to contribute to preventive health rather than treatment after the fact. Whether we’re

a business, a government agency, a university or an individual we all need to ask ourselves, are we doing enough?”

Adrian Turner, CEO of Data61 says Australia needs to build international linkages as we are citizens of a networked world. Getting global context back into Australia will help is to understand where to partner if others are ahead of the cyber security game.

“Industry, government, academia and investors need to come together to solve this. This is bigger than any one company we need to work across stakeholder groups,” Turner says.

“As a country we underestimate the depth and breadth of the cyber security issue, and we underestimate the opportunity to build a new industry. When I speak with directors of ASX-listed companies the general feedback is we understand there is an issue, but we are not properly across it.”

Turner says industry development is important for Australia’s economy where many small businesses are looking to deal with global companies that continue to push more stringent security requirements of partners.

Summit outcomes tackle practical building blocks If Australia is to develop a cyber security industry it must start by building on what we have and not attempt to start over again. The summit addressed the spectrum of shortcomings of Australia’s disparate industry capability.


COMPONENT ACTION SUMMIT OUTCOME

Expand government frameworks

Government frameworks for industry development are in place, but doing more with industry is critical.

Cyber security policy makers are now better connected with industry leaders.

Real-world problem solving

An industry can’t be developed “on the side”. It must link with real-world problems.

Forum for industry professionals to share common challenges.

Structured information sharing

A framed way for sharing intelligence and information on good practices, counter intelligence and trends.

Design forums will be run with industry leaders.

Innovation program bridge

Forge links between the startup community and corporate innovation programs. For many startups getting their first customer or proof-of-concept is difficult. Corporates can provide a way to get there.

The National Design Challenge will help surface and connect industry with Australia’s top and emerging fintech cyber security start-ups.

R&D and startup co-creation

The summit was about how to engage with startups and co-create products – not just living with whatever is off the shelf.

A Fintech Cyber Security Innovation Lab will be established to prototype emerging approaches, create value and facilitate early adoption and commercialisation.

Executive-level awareness

Boards and executive teams need more education on the importance of better cyber capability.

This report will be distributed to executive teams across financial services, government, education and other industries.

Venture funding Australian startups received about $150 million in venture funding per year compared with a huge $5 billion in Israel and even more in the US.

The federal government’s Cyber Security Growth Centre recent $230 million investment aims to promote growth by connecting Australia’s cyber security sector with investors.

Avoid working in isolation

There is quite a lot of incrementalism going on as opposed to more strategic, deeper capability development. For example, the banks could each invest into an industry capability program to work on common problems.

The new Innovation Hub will foster partnerships and identify cyber security focus areas.

Skills and career development

To provide exposure and excitement for a career in cyber security more STEM options should be available before University. Also, opening up access to Australia’s defence and intelligence capability and learning from the Israeli example where leading technology feeds down from the military to the education and private sectors.

Raised awareness of importance of becoming a “cyber smart nation” and the initiative to produce graduates to meet industry needs and encourage more women to pursue a career in fintech and cyber security.

TABLE 1: AUSTRALIA MUST BUILD ON WHAT IS DONE WELL TO DEVELOP A CYBER SECURITY INDUSTRY

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INNOVATING AT SPEED


Figure 1: The business benefits of engaging with startups and summit enablement

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Startup engagement for corporate gain Corporate decision-makers familiar with the big marketing campaigns of large ICT vendors might not see the value in working with a small startup for an equivalent business requirement. The summit identified the many benefits corporates stand to gain by engaging with startups.

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Summit organisers are now accepting expressions of interest for joining the innovation program as partners, sponsors and participants, including entrepreneurs.

“There is a clear economic imperative for cyber security capability in Australia as we have digitally-advanced industries, like banking, that demand it. It is important to develop and enhance well-established collaborative relationships between research, industry and government,”

Dr Alan Finkel, Australia’s Chief Scientist

Are you ready for cyber security innovation? The post-summit industry development programs will enable businesses and government to engage research and development and startups meaningfully. Innovation hubs like the summit co-hosts are developing will put businesses and government in the driver’s seat to “design” problems they want solved now and in future.

Become startup ready with an innovation program With the summit’s main call-to-action being a need for more collaboration, corporates can also look at branching out their own innovation programs to include startups, which in turn benefits industry development.

A key learning from the outcome of the summit was corporates have challenges interacting with startups because there is a culture of “you think you are ready”. There is a strong desire to work with startups, but the organisation is not set up to engage with them in a concerted way by identifying a problem and helping with a solution.

As organisations are increasingly forced to partner and innovate from the outside-in, collaboration becomes core to ongoing competitive advantage.

One of the biggest mindset changes to become startup ready is accepting that it is alright to “fail and fail fast”, however, this is yet to be translated to how employee performance is managed by corporates.

ESTABLISHING AUSTRALIA AS A REGIONAL FINTECH-CYBER SECURITY INNOVATION HUB

Australia’s inaugural National Fintech Cyber Security Summit is the first stage of a broader program to establish Australia as a regional hub for fintech-cyber security collaboration and innovation.

The summit is the first step in raising awareness in the value and opportunity for collaboration between two industries, fintech and cyber security, but will be followed by continuous developments across the program, including a national design challenge and an innovation hub.

“More collaboration will also teach corporates the benefits of embracing the startup business model to avoid stifling creativity,”

Gordon Archibald, Partner, Technology Risk Advisory Practice, KPMG

• THE FINTECH CYBER SECURITY SUMMIT WILL BE FOLLOWED BY CONTINUOUS DEVELOPMENTS ACROSS THE PROGRAM, INCLUDING A NATIONAL DESIGN CHALLENGE AND AN INNOVATION HUB.

• WITH A NEED FOR MORE COLLABORATION, CORPORATES SHOULD LOOK AT BRANCHING OUT INNOVATION PROGRAMS TO INCLUDE TECH STARTUPS TO SOLVE SHARED PROBLEMS AND REALISE A SIGNIFICANT VALUE CREATION OPPORTUNITY.

• FOR MOST STARTUPS CORPORATES CAN OFFER IMMEDIATE HELP BY BRINGING THEM ON BOARD AS A SUPPLIER – IT IS A MISCONCEPTION STARTUPS ARE ONLY AFTER FUNDING.

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Figure 2: Three steps to becoming startup ready

Stone & Chalk CEO, Alex Scandurra, says organisations need to go one level beyond an innovation program and think of themselves as a platform, not a series of products. “Then make decisions around what solutions and services you want to offer customers

that are led with your brand and what solutions and services you want to offer customers with your brand in the background, whether through APIs or other means this platform centricity opens up an entirely new range of options,” Scandurra says.

1. STARTUP ENGAGEMENT EXPERIENCE

• How your organisation can work with startups from a procurement and commercial standpoint.

• One finding from the summit was purchasing managers can better collaborate with smaller companies to understand their value proposition and redesign procurement process to be suitable for working with startups.

2. ORGANISATIONAL DESIGN

• The mindset, attitude and internal championing of startups to the right people. This is the “who” and the people help with the “what”.

• Not all solutions help big enterprise was a comment made at the summit. Get your organisational processes right first, then collaborate.

3. CULTURE

• Understanding and appreciating the “David and Goliath” reality of startups having short timeframes, or runways, for funding. They need answers quickly and clearly, honesty and transparency. Also, who are the decision makers?

• The summit roundtable discussion emphasised partnerships have many benefits and corporates can “try before you buy” to reduce risk. The winners will be those that succeed in getting to “yes” and figuring out how to make things work, rather than the easy “no”.

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This sentiment is shared by Daniella Traino, Cyber Security Business Lead at Data61, who believes corporates must recognise the many ways to collaborate and not be so internally focused.

“Partner with incubators and research and development organisations to create solutions and problem definitions together,” she says. “A problem one financial services organisation has can be extrapolated to the next and, ultimately, the financial services industry will be stronger together so we can grow the capability we have.”

Organisations can innovate internally, but they often spend a lot of money doing this and are prone to failure.

“Don’t miss out on a huge opportunity to collaborate with cyber security as it affects everyone. The network model will get you there faster and you will get better and more sustainable outcomes,” Traino says.

“If you want to be startup ready you need to change your attitude to risk. Our attitude to failure also has to change,”

Charles Nightingale, Chief Customer Officer

Customers trump fundingFor many startups working hard to get a product or service off the ground, corporates can offer immediate help by bringing them on board as a supplier. Scandurra says it is a misconception startups are only interested in funding.

“Yes, funding is important, but there is one thing that is the most important of all and that’s customers,” he says.

STARTUP SNAPSHOT:

Startup snapshot Nuix

Startup snapshot QuintessenceLabs

STARTUP SNAPSHOT: Nuix

QuintessenceLabs

YEAR STARTED: 2000

KEY PEOPLE: Eddie Sheehy (CEO), Rod Vawdrey (COO)

URL: https://www.nuix.com/

FLAGSHIP PRODUCT: The ‘Nuix Engine’

Nuix Pty Ltd — the Australian company used to identify personalities in the “Panama Papers” scandal — is the developer of a software platform for indexing, searching, analysing and extracting knowledge from unstructured data.

Expected to list on the Australian Securities Exchange as a business worth at least $1 billion by the end of next year, its success can be attributed to the Nuix Engine, the core of the company’s eDiscovery, digital investigation and information governance solutions. It’s the ‘secret sauce’ that makes it possible to index and search large volumes of unstructured data with speed and rigor.


For this new way of working to succeed, however, organisations will need to become “startup ready”. They will need to re-engineer their procurement processes, create testing environments and use smarter approaches to managing risk – these will be the “go to” organisations for talent and top suppliers.

During the summit QuintessenceLabs CEO Dr Vikram Sharma communicated the need to take relationships past the traditional buyer-seller dichotomy. When QuintessenceLabs started, the product was still in the research phase and with the help of private equity the company helped develop the science. Collaboration with a US manufacturing company also helped get it off the ground.

STARTUP LANDING PADS TAKE OFF IN THREE CONTINENTS

The opportunity for government to lead the way by being a customer to more startups is massive as agencies rely heavily on imported technology.

Since cyber security addresses challenges everyone can relate to, it is easy to overhype a problem and develop “vapourware”. A cure for this is a deeper understanding of the problem and a multi-disciplinary approach to problem solving.

Taking a startup international is no easy feat, and for young fintech and cyber security companies doing business beyond Australia’s borders can seem like an insurmountable dream. Thanks to new “landing pads” in Sydney, San Francisco and Tel Aviv, local startups can explore what it’s like to go global. Australia-Israel Chamber of Commerce’s Charles Nightingale says the NSW government is leading the pack for fintech startups to be chosen to go overseas and spend two weeks in Tel Aviv in September. The landing pad provides a unique short-term introduction

to the Israeli startup and entrepreneurial ecosystem. In Australia, the federal government is also supporting startup landing pads via Data61’s partnership with Cyber London (Cylon). The agreement includes developing mutually supporting programs for improved cyber skills and governance; the launch of a Cylon accelerator program in Australia; and the creation of reciprocal ‘landing pads’ where cyber innovation can be showcased to buyers and investment capital.

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Industry development depends on new ideas and a platform for turning ideas into commercial businesses. Australia has long been at the forefront of information technology adoption – from the mainframe to the mobile phone – but our relatively small market size and varying appetite for investing in startups has too often resulted in missed opportunities for domestic ICT industry development.To become a regional leader in fintech and cyber security, Australia must build a platform with enough critical mass to support an idea through to a viable product. This will not happen with one organisation alone and must be driven by collaboration.

According to Chief Scientist Alan Finkel, the cyber security opportunity requires an innovative approach on par with the considerations we have for all of Australia’s grand global challenges like training scientists, mathematicians, engineers and ICT workers.

“Can we embrace cyber security as an obligation we share, to achieve immunity for the digital herd?” Finkel says. “At the summit it was heartening to hear the many examples of Australian companies growing in this space.”

Financial services driving demandAustralia’s financial services industry is among the best in the world. Our banking structure is robust and technology adoption has resulted in easy access to the full spectrum of services, from savings accounts to securities.

According to the Financial Services Council3, financial services is Australia’s largest industry (larger than mining and manufacturing) employing more than 450,000 people and contributing $141 billion to the Australian economy.

There exists a significant opportunity for Australia’s financial services industry success to be replicated for both fintech and cyber security as both represent the future of financial services more broadly.

Richard Stiennon, Chief Research Analyst, IT-Harvest was the summit’s international speaker. Stiennon says Australia’s financial services industry is well ahead of the US when it comes to adopting digital technologies and we can look at that for identifying cyber security problems and take solutions to the US market.

Data61’s Daniella Traino says too often early-stage entrepreneurs head overseas to execute or access capital and customers.

“We are innovative but we don’t have awareness of the capital requirements for cyber security and suffer from a lack of awareness of a startup scene – it is emergent, but by no means mature,” she says.

“There is also a pipeline problem – we need to be encouraging cyber entrepreneurs and apply different thinking to the problem space. One element of that is helping the business sector meaningfully engage with innovation at all levels, and the other is by providing the support networks like partnerships with research and development groups. We heard from representatives from both sectors that the opportunity is recognised, but also collaboration around value creation is new and will take work.”

AUSTRALIA’S CYBER SECURITY, FINTECH INNOVATION PLATFORM

• AUSTRALIA IS INNOVATIVE, BUT AWARENESS OF THE CAPITAL REQUIREMENTS FOR CYBER SECURITY IS LACKING OFTEN FORCING STARTUPS OVERSEAS.

• TO COMPETE REGIONALLY STAKEHOLDERS MUST VIEW ELEMENTS OF CYBER SECURITY AS A COMMON PLATFORM THAT CAN BE USED ACROSS INDUSTRIES TO AVOID COMPETING FOR RESOURCES.

• FINANCIAL SERVICES AND GOVERNMENT AGENCIES CAN BE THE DEMAND ENGINES TO GROW DOMESTIC FINTECH AND CYBER SECURITY CAPABILITY THAT CAN SCALE.

3 FCS State of the Industry report, 2016

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For fintech and cyber security collaboration to succeed, Australian industry stakeholders must identify the challenges and develop an actionable path forward.

How can the commercial success of financial services rub off onto another industry like cyber security? According to Stone & Chalk’s Alex Scandurra, in the case of banking it is worthwhile considering what elements of cyber security can be considered a common platform that can be used across industries rather than trying to compete for resources Australia doesn’t have and trying to replicate in-house solutions multiple times.

“We also need to work back from the problems government, corporates and consumers are facing and for these organisations to partner with top startups in commercialising new solutions,” he says. “Some of the more progressive organisations are quickly realising they don’t have the resources, budgets and, importantly, time to develop new innovation internally and are recognising both the need and opportunity of collaborating with startups to create something better, cheaper and faster than they could have otherwise achieved.”

Starting on the right footWith Australia’s cyber security innovation platform mired by a lack of recognition of the opportunity, it is imperative we promote what is done well and how we can build from what we have.

Industry does a good job of competing for talent and resources and the federal government does a good job of flagging important issues, according to Scandurra.

“The government has set a good high-level strategy for the nation and help put cyber security on the map for industry and academia,” he says. “Hopefully through the Cyber Security Growth Centre there can be more cross-industry coordination.”

Innovation is at the core of cyber security and innovation can help organisation shift cyber security from a cost centre to profit centre.

“The summit proved even a small organisation with the right vision and partnerships can achieve something great,”

Alex Scandurra, CEO, Stone & Chalk

STARTUP SNAPSHOT:

Startup snapshot Nuix

Startup snapshot QuintessenceLabs

STARTUP SNAPSHOT: Nuix

QuintessenceLabs

YEAR STARTED: 2008

KEY PEOPLE: Dr Vikram Sharma (Founder & CEO)

URL: http://www.quintessencelabs.com/

FLAGSHIP PRODUCT: qStream Quantum Random Number Generator

QuintessenceLabs’ flagship product, qStream, delivers full entropy, true random numbers to network attached clients securely and at gigabit-per- second data rates. By harnessing quantum science, qStream maximises security and prioritises speed while reducing data-security management complexities. And its products will secure data both in transit, at rest or in use.

In a further salute to the company’s achievements, one of Australia’s largest banks, Westpac, is poised to take an 11 per cent stake in QuintessenceLabs and a seat on its board.

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Learning by observation: IsraelIn Israel, significant alignment exists between the government, defence forces, academia and industry. The right incentive structures are in place for commercialising cyber security technology where there is remarkable collaboration between defence, intelligence, research and industry.

Israel is at the leading edge of cyber warfare where its people gain decades-worth of experience packed into a few short years of national service. They then follow a path to university and many seek to commercialise that knowledge by creating a startup.

Given Australia’s nascent commercialisation maturity and other limitations, we must successfully collaborate with the local defence and Intelligence agencies to help develop our cyber security industry.

CYBER SECURITY CALLING FOR INVENTIVE ISRAEL

Israel is a good case study of how necessity is the mother of invention. They inherited what was a largely barren landscape and so to survive they had to build everything from nothing. What they have done better than anyone else is incentivise alignment and focus on the resources they did have – their people – to develop innovation in many areas across government, higher education, the military and private sector. It has been this collaborative effort and embedded teamwork that has helped get them to where they are today. We can learn a lot from global cyber innovators like Israel, but the key is not to try to replicate everything other nations do, but focus on our strengths and build on them, which was a consensus from the roundtable.

Owing to the financial services sector’s responsibility to protect data and transactions that keep the economy moving, Scandurra believes the industry can be the demand engine to grow domestic fintech and cyber security capability that can scale.

According to Ben Rubinstein, a senior lecturer with the Department of Computing and Information Systems at the University of Melbourne, universities can play a number of industry development roles, with the most obvious being training future cyber security experts, engineers and business leaders.

“There is certainly a big skills shortage so it is important for universities to play a part. Universities have an appetite to collaborate with industry on training and get feedback from industry on what skills they want,” he says.

This extends to industry exploiting university research and development capability. Large companies, particularly in financial services, require advanced research across cryptography, blockchain technology, quantum cryptography, and machine learning and data science, Rubinstein says.

“Universities have the research capability for those areas, but they can’t do it alone, we are not equipped like big companies,” he says.

The mismatch between Australia’s financial services strength and our cyber security innovation is echoed by Gordon Archibald, a partner within KPMG’s technology risk advisory practice, who believes this would develop faster if there was more awareness of the impact of cyber attacks.

“A lot of innovation is still all words and it is not being shared properly and collaboration needs to be improved,” Archibald says. “Focus on cyber security as a business enabler. It is about having trust and confidence to transform business, open new markets and consume new technology. It is time to move away from the mindset of not embracing new business opportunities.”


APPLICATIONS WHERE FINTECH AND CYBER SECURITY MEET


Australia has reached a significant turning point in its home-grown cyber security and fintech development capability. A three-phased program is now underway to help develop Australia’s cyber security industry. Phase one was completed in May with the inaugural National Fintech Cyber Security Summit.For phase two, a national fintech and cyber security design challenge will be held. Organisations are invited to become a partner and to contribute in three ways:

1. Contribute to the problems, challenges or opportunities that your organisation would like to collaborate on with startups.

2. Provide access to colleagues with the relevant expertise and authority to work alongside some of the startups and to act as startup mentors.

3. Help co-fund the design challenge through a partnership contribution4.

Each design challenge partner will be a “full partner” and will be invited to participate in the preparatory and delivery stages. The national cyber security design challenge will seek to attract leading cyber startups and researchers from across Australia and the Asia-Pacific region. The selected teams will have the opportunity to work alongside experts from the innovation program partners. The objective being to create, commercialise and, ultimately, scale innovation in cyber security with real-world applications.

The design challenge will adopt the following methodology:

CONTRIBUTE TO AUSTRALIA’S CYBER SECURITY DEVELOPMENT

Figure 3: The National Cyber Security Design Challenge project methodology

PROJECT PHASING

PHASE 1 PHASE 2 PHASE 3 PHASE 4

Understanding the problem and

customer pain points

Application review and selection

process

Accelerate the idea with sponsors

incubation and commercialisation phase

• ORGANISATIONS ARE INVITED TO CONTRIBUTE TO THE NATIONAL FINTECH CYBER SECURITY DESIGN CHALLENGE.

• THE DESIGN CHALLENGE OBJECTIVE IS TO CREATE, COMMERCIALISE AND, ULTIMATELY, SCALE INNOVATION IN CYBER SECURITY WITH REAL-WORLD APPLICATIONS.

• THE CYBER SECURITY INNOVATION LAB WILL BRING TOGETHER STARTUPS AND RESEARCHERS TO WORK ALONGSIDE CORPORATE AND GOVERNMENT ORGANISATIONS TO CREATE AND COMMERCIALISE NEW IDEAS AT THE INTERSECTION OF FINTECH AND CYBER SECURITY.

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Phase three, the final phase, will be the launch of the Cyber Security Innovation Lab where startups and researchers can work alongside larger corporate and government organisations to create and commercialise new ideas in cyber security and fintech.

“We need to look at the intersection of the two industries to solve complex problems and deliver real impact through collaboration, rather than by competing,” Daniella Traino, Cyber Security Business Leader, Data61

The innovation lab will bring many ideas to practical fruition and serve as an incubator for new business development much sought after by startups.

With the right collaborative structure in place, Australia has the opportunity to become a cyber security industry leader in the Asia-Pacific region.

Ben Rubinstein, a senior lecturer with the Department of Computing and Information Systems at the University of Melbourne, says there is unlikely to ever be one “central location” for cyber security development in Australia, but it is good for universities to participate with programs like the Innovation Hub to be part of a centre of excellence and provide guidance on which problems to tackle.

“Programs like these are a good matchmaker between universities and government research programs to help select the most pressing problems,” Ben Rubinstein, senior lecturer, Department of Computing and Information Systems, University of Melbourne

REGISTER YOUR EXPRESSION OF INTERESTThis promises to be an exciting journey for all our partners and Australia as a whole, as we embark on establishing a Fintech Cyber Innovation Hub as a lead in the Asia Pacific region.

To participate, or for further information please contact [email protected] in the first instance, and the Fintech Cyber Security Innovation Hub partners will follow up with you directly.

www.fintechcyberhub.com

4 More information on co-funding will be provided separately to registered participants.

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ABOUT THIS REPORT

TYPE PURPOSE SUMMIT CALL-TO-ACTION

Data61 Research & Development

Support government and private sector research and development programs. Connect startups with industry. CSIRO’s Data61 is Australia’s largest data-focussed research and innovation group.

Raise awareness of the capital of Data61 which can be directed to help catalyse the industry. Solve problems and extend partnerships, run design challenges and co-located labs. Then open this to entrepreneurs and corporates.

Australia-Israel Chamber of Commerce

International trade Form strategic alliances with companies operating in Australia and Israel.

Look at what can be done to help Australian business connect to startups in Israel at a macro level. Organise trade missions to Israel.

Stone & Chalk Startup incubator Help high growth potential startups commercialise and rapidly scale. Help government and industry partner with startups to rapidly evolve.

Showcase Australia’s cyber security potential. Provide the collaboration opportunity and help develop Australian cyber security capability.

KPMG Business consulting Cyber security advisory services to large organisations.

Advise corporate clients of the benefits of collaborating with startups as part of innovation programs. Demonstrate best practices for dealing with smaller startups.

TABLE 2: ABOUT THE NATIONAL FINTECH CYBER SECURITY SUMMIT SPONSORING ORGANISATIONS

This report was produced by CSIRO’s Data61, Stone & Chalk, KMPG and the Australia Israel Chamber of Commerce. The report sponsors welcome any interest from local entrepreneurs looking to develop fintech cyber security technology, or from businesses looking to engage with this startup ecosystem.

The co-hosts and partners of the National Fintech Cyber Security Summit are good examples of diverse organisations coming together to contribute to a common objective. Each brings a unique capability to the summit’s objective and show how any organisation can participate in Australia’s cyber security industry development.


5 http://www.innovation.gov.au/

We now invite leaders of industry, government and research in Australia to come together to be at the forefront of fintech cyber security innovation and deliver a new model of industry development to create and commercialise export-grade fintech and cyber security products and services.

Australia has a strategic vision to become a leader in cyber security and fintech in the Asia-Pacific region. This report identifies the challenges and opportunities Australia faces to turn our nascent capability into a global industry.

National fintech cyber security summit highlights industry opportunitiesMay 3, 2016 marked a watershed moment in Australia’s ICT history. The first National Fintech Cyber Security Summit brought together senior executives from research, government, industry and startups to discuss opportunities and best practices for collaboration.

The objective of the summit was clear: to help grow Australia’s fintech and cyber security ecosystems by generating critical conversations and address the technological, cultural and mindset challenges to stimulate more collaboration.

In April, one month before the summit, the federal government released Australia’s cyber security strategy which stipulated cyber security to be not only important for protection against malicious activity online, but imperative for business growth and innovation. The strategy includes 33 new initiatives, supported by $230 million in government funding.

The first government-led initiative is the establishment of the new Cyber Security Growth Centre as part of the National Innovation and Science Agenda5. With $30 million in funding until 2020, the centre will bring together industry, researchers and government agencies to create a nation cyber security innovation network; develop a strategy for Australia’s cyber security industry to become a global leader and attract foreign investment; and coordinate cyber security research and innovation to maximise efficiency.

Summit timing ideal to spur collaborationWith the government’s innovation agenda in motion, the summit exposed a new kind of collaboration opportunity between established industries, research organisations and smaller startups.

During the summit’s roundtable event, participants recognised the opportunity of fintech and cyber security coming together to focus on innovating around complex business problems in cyber security, and the strength in collaboration with research, industry and government.

The summit was the first time such a high calibre delegation of cyber security and fintech leaders gathered in a forum of this type and attendees heard inspiring stories from startups showing it is possible to be successful from Australia and create something in the region with potential to be quite powerful. Messages from the corporate world on what we need to do better to engage startups and create growth and value were also shared.

Moreover, the summit uniquely brought together key stakeholders with many longing for new collaborative efforts across industries and research groups.

The participants of the roundtable voiced their willingness to play a key role in collaborating to help develop Australia’s cyber security capability. While it is easy to be distracted by what we are lacking, Australia has potential and valuable resources.

In addition to more collaboration, summit attendees expressed the need for Australia to develop its own cyber security industry to reduce dependence on imports and take advantage of domestic intellect to solve cyber security challenges differently, which can help impact the cyber security threat landscape globally. By doing so Australia has the opportunity to create a sustainable and economically viable industry and play a significant leadership role regionally.

Being able to engage with a range of different sized organisations was also a significant benefit for summit attendees. For a first summit it was a success and there are bigger plans for the next one.

CONTACT DETAILS

This promises to be an exciting journey for all our partners and Australia as a whole, as we embark on establishing a Fintech Cyber Innovation Hub as a lead in the Asia Pacific region.

To participate, or for further information please contact [email protected] in the first instance, and the Fintech Cyber Security Innovation Hub partners will follow up with you directly.



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