Financial technologies (fintech)

Sophisticated, deep and liquid capital markets make Australia one of the major centres of financial markets activity in Asia. The strength of our financial services sector is underpinned by a mandated retirement savings scheme, a highly skilled and multilingual workforce and advanced business infrastructure.

All this makes us a great place for fintechs to do business – both startups and established players. We offer a fintech-friendly regulatory regime, an early adopter, digitally-savvy population, and a depth of fintech talent.

By bringing your fintech business to Australia, you’ll be joining a mature and innovative ecosystem with strong links to all major fintech markets around the world. We’re doing great things in sub-sectors like neobanking, payment systems, wealthtech and regtech.

‘Australia is embracing a fintech future and has great support for new fintech players.’ – Ryan Edwards-Pritchard, from the UK, now based in Sydney

Australia has been an early adopter of financial services innovation and technology. We’re backing ambitious fintech startups with government support to export financial services. We’re also supporting two blockchain pilots to reduce business compliance costs. Fintech startups are entitled to tax offsets, and early-stage startups can claim a rebate of 62 cents for every tax dollar they spend on R&D.

Built on the strong foundations of our A$10 trillion financial services industry, our fintech sector is leading the world, with 700+ operations – seven of which are among the 100 most innovative worldwide.

Our fintech ecosystem includes incubators and accelerators, major banks, industry associations, venture capital firms and government.

According to the FinTech Australia EY Census, 88% of Australian fintechs three years or older are post-revenue, and 14% have raised more than A$100 million in capital.

This is no surprise with so many Australian industry associations and incubators dedicated to helping startups and businesses succeed. These include:

• FinTech Australia
• Blockchain Australia
• InsurTech Australia
• RegTech Hub
• RoZetta Ventures

Australian Digital Innovation on the Rise charts opportunities in the startup, venture capital and technology sector.

Startup hubs are common in most Australian cities. Places like Stone & Chalk in Sydney, Melbourne and Adelaide, Haymarket HQ in Sydney and The Precinct in Brisbane attract innovators and foster networks.

Australia’s banks also invest directly into promising fintechs through their venture capital arms such as Reinventure and X15.

Australian consumers are technologically savvy – almost two-thirds of digitally active adults use fintech products. This has led to a demand for customer-centric products, services and solutions right across the Australian financial services sector.

‘The fintech sector continues to mature and rebound in Australia – investments are taking place across a range of sub-sectors and from a broad set of investor groups. We are continuing to see investment in start-up and scale-up businesses, as well as significant M&A activity for more mature players in the space. We expect this momentum to continue and predict that 2022 will be a record year for fintech investment in Australia’ – Daniel Teper, National Fintech Lead, KPMG Australia

Australia’s Consumer Data Rights and New Payments Platform, together with identity requirements, are driving confidence in new products and so creating new opportunities for fintech businesses.

We are early adopters of technologies to support decentralised finance and cryptocurrency assets, and there is plenty of potential to introduce equity-related fintech products and services in capital markets, with a good mix of local boutique and global investment banks in Australia.

With a fast-growing fintech ecosystem in Australia, there are opportunities for businesses and individuals with expertise in:

• data security
• predictive analysis
• artificial intelligence
• machine learning
• robotics
• natural language processing
• 5G
• Internet of Things
• cloud technologies
• blockchain.

In Australia, regulators and industry are working together to create a ‘fintech-friendly’ environment. We have secure and stable financial services regulations – vital for consumer confidence – and a significant software and technology talent pool.

Australia’s regulatory agencies take an innovation led approach to new business models and assets classes. As a founding member of the Global Financial Innovation Network (GFIN), ASIC supports pathways for foreign fintech companies to operate within Australia.

• ASIC’s Innovation Hub helps startups navigate the regulatory system and the Digital Finance Advisory Panel advises on policy priorities.
• The enhanced regulatory sandbox lets businesses test a wide range of products and services for 24 months without needing a financial services licence or a credit licence.

Australians are enthusiastic adopters of new technology which makes us a great place to trial new tech. We were one of the first testing grounds for contactless payments, for example.

We’re popular as a testbed for Asian fintechs who want to enter western markets because we are demographically similar to much of Western Europe and North America. The population has high smartphone penetration and is digitally and financially literate. We have excellent financial inclusion with a banked population of nearly 100%.

Australia’s financial sector regulation is recognised as world’s best practice. We provide a transparent and secure base for launching new operations within the region.

Sector growth has been steady at around 9% per year over the last 20 years. We’re building on these strong foundations and making Australia a financial centre of the Asia-Pacific region. We currently lead the region in investment management, real asset financing and securitisation.

The Australian Government has introduced legislation to supercharge international investment into Australia’s funds management industry. The Corporate Collective Investment Vehicle regime will allow the industry to use a structure that is more familiar to overseas investors and provide economies of scale to both domestic and international investors. This will further enhance Australia’s attractiveness as a location to manage global capital

We have mutually beneficial trade agreements with the UK and Singapore to reduce barriers to entry and promote opportunities in each market. For example, the UK-Australia FinTech Bridge helps Australia’s fintech ecosystem directly engage with customers, investors and regulators with one of the world’s largest fintech markets.

Newcomers to the industry can access support through a number of sources, including Venture Capital Limited Partnership Program grants and for finance services exporters, the Export Finance Agency offers a range of programs.

We also offer a host of tax incentives, such as:

• Attribution managed investment trust tax regime
• Foreign resident capital gains tax regime
• Non-portfolio dividends – exemption
• Offshore Banking Units.

The Australian Trade and Investment Commission has detailed information on the additional support for fintech companies to expand and attract foreign investment.

• Making money smart
• Useful and secure data analytics
• Lease management with AI efficiencies