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The latest summary of Australia’s FinTech world shows more than 100 new FinTechs have entered the demand segment over the past twelve months, with lending apps and blockchain technology dominating the list of entrants.
Professional services firm KPMG last surveyed Australia’s FinTech market in September 2019, when there were 630 active FinTechs in the country. According to the latest study published, that number is over 730 – signaling rapid growth in a year of unprecedented economic challenges.
“Despite the impact of Covid-19 on the economy, increased digitization across financial services and new customer behaviors have created new opportunities for innovation,” commented Daniel Teper, National FinTech Lead at KPMG Australia.
A quick look at growth by sub-segment is enough to support this assessment. The core product of Covid-19 was compressed cash flows. With thousands of businesses in need of liquidity, it’s no wonder that loan applications — specifically those targeting small businesses — jumped by more than 30%, representing 26 new businesses.
But the biggest jump was in the blockchain space, where 49 new participants saw a 150% increase over last year. This is also in line with broader market trends, where blockchain has soared to record highs in recent weeks and months. Cryptocurrency has emerged as a possible alternative to gold as it offers a hedge against inflation and general economic turbulence.
Meanwhile, the payments space remains dominant, with more than 150 active companies and a jump of nearly 6% over the past year. Other sub-segments seeing growth include InsurTech, Capital Markets and Neobanks – signaling the breadth of influence FinTech is gaining.
Investment opportunity
“The overall impressive net growth in the number of FinTechs illustrates both strong market dynamics and strong support for the FinTech sector in Australia.” Consumers are certainly jumping on the bandwagon. Back in 2019, another Big Four accountancy and consultancy firm EY published a report which showed that almost 60% of Australian consumers use some kind of FinTech service.
With Covid-19 and the widespread shift to online life and business, the need for digital personal finance management has only intensified. This momentum might just cover the next mile for FinTech adoption, and the direct result has been a surge in investment flowing into the sector.
As Teper explained, “we are also starting to see an increased level of corporate mergers and acquisitions as traditional players show interest in FinTechs’ product innovation, technology and market offering and in helping to grow their core businesses as well as compete with some of them. global FinTech providers entering or looking to enter the Australian market.”
A 2019 study by KPMG revealed that Australia was home to seven of the top 100 FinTech companies in the world. With investor interest increasing day by day, the market is poised to strengthen further.
KPMG itself is one of the more active players in the Australian FinTech region. The company got into the game early, acquiring FinTech Markets IT in 2016 – a move country CEO Gary Wingrove described at the time as “timely and strategic”. A year later, the acquisition of Matchi – a global FinTech matchmaking platform – followed.
Having built its own capacity in this space, KPMG is now facilitating the growth of FinTech in Australia and around the world. KPMG Australia runs the Mutuals FinTech Accelerator – a 12-week program that matches promising startups with the country’s most forward-thinking mutual banks. That’s in addition to advising on myriad mergers and acquisitions in the space — a function led by Teper himself.
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