The fintech sector continues to grow at a prodigious pace. According to KPMG’s Fintech Pulse, 2018 is on pace to be a record-breaking year for fintech funding with $57B in investment pouring into companies across the globe in the first half of this year.
As part of the fastest growing region in the sector, Australia has the potential to be a regional hub for the next phase of growth for the industry. In fact, there is a ‘perfect storm’ brewing in Australia for the fintech sector with changes to the regulatory landscape, growing acceptance by consumers of new and innovative financial service offerings and all this is set against an industry that has not adapted well to ‘software eating the world’.
These factors are coming together to form an amazing opportunity for new companies to emerge in a sector ripe for disruption and all right here in Australia.
Reducing the regulatory burden
Building products in the financial services industry is hard. This has traditionally been driven by the complex regulatory regime that exists in the sector. It goes without saying that regulation is an important part of a well functioning financial services sector. However, it also needs to provide avenues for innovation to occur and not, by virtue of its rigidity, stifle new innovative business models from emerging.
Australia has in many regards been a world-leading jurisdiction in working on removing the friction that exists in building a fintech startup. With initiatives like the sandbox regime, the removal of ‘double GST’ from digital currency, the forthcoming open data regime, the implementation of an equity crowdfunding framework and amendments to the bank licensing to name a few – Australia’s financial services law regime is moving rapidly to adapt to a new software-centric world.
Although there is more work to be done, these initiatives are an important starting point for removing the regulatory roadblocks. These roadblocks have traditionally impeded rapid innovation in this sector and more importantly their changes are leading to a more competitive financial services landscape with consumers being the ultimate winners.
A growing customer base being serviced by innovative startups
According to the EY’s Fintech Adoption Index, Australian consumers are rapidly embracing fintech products – with Australia now placed fifth globally on the index. This is an important tipping point for the industry and a strong sign that consumers are willing (and able) to support the industry by actually using their products.
Consumers are more than ever looking for digitally native solutions that fit their lifestyle and fintech startups are providing these solutions in an industry that has traditionally moved slowly to embrace innovation. As software continues to ‘eat the world’ we are seeing more innovative business models being used to provide better experiences to consumers. Everything from payments to the superannuation industry is being disrupted by innovative Australian fintech startups focused on providing a better experience for the end consumer – and consumers in Australia are adopting them in droves.
At Fintech Australia we have been proud to be the voice for startups in the sector and have in many instances led the charge around promoting and advocating for the industry. We’re excited to help highlight these companies and the amazing work they’re doing at an event like Intersekt – which is a great opportunity to see what is next for the industry – as this perfect storm continues to gain momentum.
Where to next?
Australia is well placed globally to be a hub for innovation in the sector and with more changes likely to come in the market due to things such as the Royal Commission into Banking now is the time to build the next fintech unicorn right here in Australia.
Alan Tsen is the GM of Stone&Chalk Melbourne and the chair of Fintech Australia.