Scaling the Fintech Opportunity for Sydney and Australia

Scaling the Fintech Opportunity: Sydney and Australia

Commissioned by The Committee for Sydney and authored by KPMG, the Scaling the Fintech Opportunity: for Sydney and Australia report examines achievements that have been made since 2014 and identifies areas that need to be addressed to enable Sydney (and Australia) to become a strong and prosperous fintech ecosystem.

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Office buildings in Barangaroo, Sydney Australia

This follow-up report to Unlocking the Potential: The Fintech opportunity for Sydney, published October 2014, has been developed to determine whether digital and fintech innovations have been successfully adopted in the Australian financial services industry, to identify any impediments to further industry progress and provide recommendations for both the public and private sectors to improve Australia’s standing in a global and regional context.

The report finds that the number of fintech startups in Australia has increased from less than 100 in 2014 to 579 companies today, with around 60 percent of all fintech companies basing themselves in Sydney.

The range of sectors has also diversified substantially, with 10 fintech categories having more than 20 fintechs operating locally. The two largest sectors by number of fintech companies and capital investment are payments (128 companies) and lending (80 companies), with substantial growth in both categories. Wealthtech (78 companies) ranks third highest for number of companies and has also continued to grow, reflecting the sophisticated state of our financial services industry.

Australian fintech investment has remained strong with $US675 million invested in the fintech sector in 2016 compared to $US53 million in 2012. This is despite an overall global decline in investment in the fintech sector.

However, the report finds that the Australian sector faces threats from international tech giants and disruptive startups entering financial services. Also, regulatory challenges continue to stifle innovation and have the potential to create uneven playing fields for incumbents, startups and tech giants alike.

Key findings of the report

  • Australia has potential to lead the world in areas of fintech innovations such as payments, regtech and blockchain.
  • Government policy, support and vision plays a critical role in the growth of fintech, especially in regards to the ongoing development of the regulatory environment and development of skills and talent attraction.
  • Although London is seen as the clear global leader, there is an opportunity for Sydney to become the fintech hub of Asia.
  • Evolving consumer trends for fintech in Australia show an increasing demand for faster, more convenient and accessible finance and payment services that are embedded into people’s lifestyle and experiences, such as buying a home.

The report outlines 10 core recommendations to further enhance and scale the Australian fintech ecosystem for both private and public sector.

Getting this right has the potential to contribute to the development of other adjacent sectors. Fintech could play a key role in enabling smart city outcomes; for example, payments has the potential to influence and shape citizen behaviour around transport by creating differentiated transport pricing and rewarding outcomes that reduce congestion.

Scaling the Fintech opportunity for Sydney and Australia is not simply about the development of the financial services industry. It also has the potential to develop infrastructure that can support the delivery of economic and societal benefits more efficiently and effectively; today and into the future.

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