What’s Driving the Australian Fintech Revolution?


What’s Driving the Australian Fintech Revolution?

Disruptive forces have been stalking the financial services sector for several years now, with Financial Technology (FinTech) ventures giving traditional banks a run for their money. For a market that made its first big waves in the UK and US, the ‘Australian FinTech’ market has now firmly taken shape.

With many commentators believing that given Australia’s strength in the financial services sector, the emerging Australian Fintech market has the potential to become a major player in the global FinTech space.

So, with this in mind, we ask the question, “What’s driving the Australian FinTech revolution?”

In this article, we’ll explore the factors assisting these fast-paced, technology-driven organisations to take centre stage in Australia’s financial services marketplace, and how you may benefit from this growing market sector.

Investment in FinTech is booming.

Fin Tech has been a boom sector in the US and UK for a while now, with firms with capital-light, technology-rich business models shaking up the big banks. Where FinTech organisations have been concerned, it seems nothing is sacred, as players in the space have moved in to offer financial products and services across all of the traditional areas of banking including personal finance, wealth management, insurance, payments, accounting and foreign exchange.

With billions of dollars having been invested in FinTech products already; interest in FinTech companies continues to grow. In 2016, some of the largest initial public offerings among technology companies were for FinTechs, with Pushpay, Bravura Solutions and Afterpay Holdings among the top capital raisers resulting in investors backing many early-stage, often loss-making FinTech firms in droves to get on board the movement.

Startups are fuelling the revolution.

FinTechs and startups are both driven by innovation and technology. Because both startups and FinTech organisations are enabled by the power of cloud computing, open APIs, and the ability to move quickly from conception to implementation, what a nimble startup can get done in a few weeks could take some traditional firm years to achieve.

According to numerous industry commentators, it’s this ability to ‘build fast, move fast and alter consumer expectations’ that makes FinTech startups so attractive, and explains how venture capital backed startups scored $13.8 billion worth of investment across 653 deals in 2015 (see What banks can learn from FinTech startups).

Existing companies are leading the charge.

While startups may be fuelling the Australian FinTech revolution, plenty of existing companies that have been in the industry for the duration are also driving growth in the sector. Just like startups; these long-standing market players are focused on how technology can drive the financial services sector forward, with many of these companies having spent millions in research and development over the past few years.

This, of course, includes one of Australia’s most successful (top 200 ASX) publicly listed companies TechnologyOne, which has been operating in the enterprise software market for almost 30 years. TechnologyOne attributes its success to its cloud-first, mobile-first strategy where they invested $46 million in its research and development program (20% of its revenue) in 2016 alone.

Other Australian companies such as Secure Pay, Merchant Warrior and SCNet which are making inroads in the payment gateway market offer tools that allow businesses to accept payments securely via their website. With features such as seamless integration within shopping cart software and add-ons tools to manage back-office reporting and admin functions, it’s easy to see why these companies are going from strength to strength.

Rapid product development and support systems.

A large part of the Australian FinTech market has been built on a model of collaboration and open source creation. Within Australian FinTechs it’s commonplace to see regular hackathons, idea incubators, and business accelerators designed to germinate ideas at the core of their success.

Digital agencies such as OSE regularly support FinTech companies by providing specialist expertise assisting with rapid product development (i.e. prototyping app development and web solutions). By simplifying product development practices through a digital partnership, FinTechs have been able to deliver their products and services to the market quicker.

Government investment in Fintech.

Like most Government agencies around the world, the Australian Government has committed to seeing the FinTech industry thrive. The Australian Government has put its weight behind a national FinTech program designed to work through any issues that may act as a barrier to the sectors’ success.

Policies that govern issues such as funding sources, tax on digital currencies, financial regulations and cyber security are all under the spotlight, with the Australian Government demonstrating that it is especially keen to foster innovation and ensure ideas are converted into commercial opportunities and for a good reason.

With job creation and growth being two of the driving factors contributing to the Government’s willingness to assist, you can be sure that the Australian Government will continue to act as a launch pad for FinTech investment into Asia and other overseas markets.

With this in mind, a key area of focus at present for the Australian Government is working towards providing a regulatory environment that enables innovation. By looking at ways to engage with FinTech suppliers to improve the Government’s own service delivery models resulting in more efficient payment systems, greater choice and responsiveness for service users, the state of the market results in a win-win for all involved.

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