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.
Thinking about entering the Australian market?
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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
Findexable Global Fintech Rankings Report 2021
Embracing a fintech future
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.
Today this innovative mindset continues to fuel the growth of our economy and broader society. With unparalleled lifestyle opportunities and a business environment that’s based on a strong and diverse small business sector, Australia provides opportunities for global talent to thrive.
The Australian Government’s growth-focused business support plays a pivotal role in helping Australian companies attract the best talent in the world to our shores, and this contributes significantly to the culture, diversity and skills of our business landscape.’
Open for business and growing fast
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:
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.
Podcast: Bloomberg interview with Lucy Liu, Airwallex
A wealth of fintech opportunities
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.
Fintech-friendly regulators
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.
Sub-sector opportunities
Sub-sectors offering a wealth of opportunities to develop, source and scale next-generation fintech include neobanking; payment systems, transfers and digital wallets; wealthtech; and regtech.
Australia as a testing ground
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%.
Opportunities for regional expansion
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.
Incentives, grants and support
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.
Fintech
- Almost 60% of digitally active adults in Australia used Fintech products in 2019
- Australian Fintech grew from a A$250 million industry in 2015 to a A$4 billion industry in 2021
- Australian Fintech recorded A$2.5 billion investment in 2021
- International fintech firms in Australia:
- NASDAQ OMX
- OnDeck
- CRiskCo
- 10x Future Technologies
- OakNorth
- 7 Australian companies in KPMG’s 2019 Global Top 100: Airwallex, Judo, Afterpay, Athena, Daisee, Slyp and Sempo
Financial services
- US$7.7 trillion assets, 5 x Australia’s nominal GDP
- One of the largest pools of contestable funds under management globally, valued at over US$850 billion
- 5th largest pension pool – US$2.3 trillion in pension assets
- 6th largest pool of managed funds – US$2.5 trillion in funds under management
- 9th largest stock market – US$1.6 trillion
- 10th largest foreign exchange market – US$119 billion OTC foreign exchange daily turnover
- 10th largest total debt securities outstanding – US$2.4 trillion
The Australian Government’s support for innovation, through initiatives like the Global Talent Visa Program, help us attract the best talent globally and bring them to Australia. This is vital for us to compete on the international stage while growing jobs and skills in Australia. Over time, this also plays a critical role in fostering the next generation of local start-ups.
