Aussie fintechs surpass 80 percent revenue growth
(21 October 2019 - Australia) Fintech Australia research reveals Australian fintechs have expanded revenue growth by 80 percent year-on-year and are highly optimistic about the future of the industry.
The 2019 EY FinTech Australia Census is based on a national online survey of 120 Australian fintechs coupled with qualitative interviews in June and July 2019 of fintech industry leaders and conducted annually for the past four years. The results show the financial position of Australian fintechs is improving with almost one in four local fintechs profitable, up from one in five in 2018.
Three in four Australian fintechs (77 percent) are now post-revenue and median revenue growth has grown 80 percent from 2018. There has unsurprisingly been a major impact from the 2018 royal commission into misconduct in the financial services sector. 49 percent of Aussie fintechs stated they had seen a stronger uptake of fintech solutions by and 26 percent confirmed that incumbent financial institutions had become more willing to partner or white label with them. 85 percent foresee open banking and consumer data rights as an effective growth initiative. 64 percent expect to increase employee headcount and one in two hold international growth aspirations.
The research also found that despite significant growth across the fintech sector, one of its most pressing challenges this year has been difficulty accessing capital. Local fintech capital raisings fell from 43 percent to 38 percent since 2018, and among fintechs attempting to raise capital, 45 percent raised over A$1 million in their latest round compared to 63 percent in 2018. Many fintechs are using collaborations and partnerships to scale up, such as ANZ and Salesforce joining Westpac’s Reinventure Group to invest in Valiant Finance, a software platform that links small business with non-bank lenders.
Fintechs are increasingly expanding into investment and lending fields that are potentially lucrative, but also subject to complex legal and regulatory frameworks. AUSTRAC has ordered audits on fintechs and is now working closely with regulators such as the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) to ensure businesses comply with legal obligations.
“The Australian fintech sector is continuing to mature and grow, becoming increasingly profitable and globally connected. A key theme we are seeing this year is an increase in the degree of collaboration between fintechs and traditional financial services players. While still highly competitive, it’s fair to say that there are much more mature, streamlined and effective relationships emerging" stated EY Australia Partner and Fintech Advisor Meredith Angwin.
“One third of Australian fintech firms were now working in wealth and investment products and almost one in five are in lending. What fintechs are saying in that space is that it takes them time. They are looking to, and working with, the main players, as well as working with the regulators to look at how innovation can continue to be introduced in the financial services landscape” she added.
“Trust and customer experience will be more important than ever. Fintechs are in a great position to benefit from open banking because we’ve always put the customer at the heart of what we do – but we’ll need to work hard to earn and keep trust. This means innovating and improving our products and services every day so we can deliver outstanding customer experiences and that ‘wow’ moment for our small-business owners" said Prospa Joint CEO and Founder Beau BertolIi
“Significant work has gone into encouraging women in the fintech sector. To see female representation strongly trending positively is incredibly heartening for the industry. While talent is always a key concern for fintech, we’re also pleased to see that it’s becoming less of a burden for emerging companies. We believe this is a product of more financial services talent seeing fintechs as a viable option for advancing their career and challenging their skills" stated FinTech Australia General Manager Rebecca Schot-Guppy.