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FinTech Australia
EY FinTech Australia Census 2017
Profiling and defining the fintech sector
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Contents
Introduction5
The Australian fintech landscape
8
Drivers of success12
Future focus22
About the research7
Contact us27
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24%
14%
24%
20%
10%
6%
Over the last year, the Australian fintech industry has matured
Median revenue growth (post revenue companies)
Year on year post revenue growth has been substantial
Revenue decline
Nil growth
1% to 100%
101% to 300%
301% to 700%
>700%
57%
71%
Post-revenue fintechs
A greater proportion are now post revenue
2016
2017
June 2017 vs. June 2016208%
Key business challenges decreasing
Suitability of systems and viability of business models are less likely to be internal impediments
47%
2016Creating suitable
systems and
processes 31%
2017
37%
2016Business model
viability 25%
2017
Future outlook
More fintechs are looking to expand overseas in the next 12 months
38%
2016Expand/expand
further overseas 54%
2017
Median fintech post revenue growth
United Kingdom
Singapore
United States
New Zealand
Hong Kong
Canada 22%
22%
27%
38%
40%
49%
Top 6 markets for potential expansion (excl. don’t know)
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Fast facts: The fintech landscape in Australia 2017
Sector profile
Fintech leader profile (founders/CEOs)
Capital (multiple response – excl. don’t know) Government support and the regulatory environment
Type of fintech (top 2)
TalentMonthly burn rate
Outlook: Next 12 months expectations
End customer profile
Relationship with incumbents
Globally competitive
63%agree Australian fintech companies will be able to compete internationally
45%agree Australian fintechs will be able to win against international fintechs
Private funding
Commercial funding
72% 57%
40%25%
32%
Average scale of last capital fundraising $3.0m
$4.1mAverage capital raised to date
Average burn rate (excl. profitable fintechs)
Top 2 talent shortages:
Engineering/software
Sales
Top 2 approaches to talent recruitment
Founders/ employees/ personal contacts
Recruitment agencies
NSW
VIC
Other
1 year or less
2 to 3 years
>3 years
Base:
28%
19%
54%
Company age:
31%
48%
21%
No. of employees (median):
2
5Full time
Part time
Company stage:
Both30%
Retail consumers
Sophisticated investors
45%
22%
SME and other start-ups
Corporate
35%
33%
Banks and other FSI’s
Government
43%
14%
40%nominate “building partnerships with banks and other financial institutions” as a key external challenge
Paying customers
5% 21% 21% 24% 29%
None 1 to 10 11 to 50 51 to 500 >500
No. paying customers
(post revenue)
Grow revenue
75%Grow employee rate
63%Expand/ expand further overseas
54%
agree accelerators/incubators are important contributors to the success of the fintech industry
85%
60%
agree government mandated open data protocols would be effective
39%have a financial licence
71%
55%
61%
41%
39%
17%
Lending
23%Wealth and investment
30%
76% male
24% female
Gender (workforce participation)
Education: Average no. of start-ups founded:
2.1
only B2C 25%
only B2B 41%
Industry gender profile
of fintechs have all male founders
83%
Median fintech post revenue growth
June 2017 vs. June 2016
46%Agree that attracting qualified or suitable talent is an internal challenge
208%
54% post grad
32% under grad
Post-revenue
Pre revenue
71% 29%
$115k
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Welcome to the second EY FinTech Australia Census 2017.
FinTech Australia has continued its successful collaboration with
Ernst & Young Services Pty Ltd (EY) and Ernst & Young Services
No.2 Pty Ltd (EY Sweeney) to deliver this important piece of
research. This Census remains the most detailed and broad
analysis of the Australian fintech ecosystem and at initial release
in 2016, was the first census of its type globally.
This research initiative forms a critical part of FinTech Australia’s
efforts to foster a thriving fintech ecosystem. Australia’s fintech
industry is continuing to grow and is increasingly becoming the
first choice for businesses and consumers when they are
selecting a financial service.
The Census gives us hard data and credible insights to back our
advocacy work to drive the industry’s ongoing expansion. This
year’s Census delivers new insights into key industry issues,
including how we increase female participation, encourage
international expansion and remove barriers to growth.
This report is also arguably the best source document to define
the overall shape of Australia’s fintech industry and how we
differ to overseas markets. It gives us fine-grain detail about the
established and emerging sub-sectors within fintech and helps
track the industry’s increasing maturity in terms of company size
and revenue.
We hope you enjoy reading the Census and learning about the
dynamic fintech industry we have here in Australia.
Danielle Szetho, FinTech Australia CEO
Simon Cant, FinTech Australia Chair
Stuart Stoyan, FinTech Australia Deputy Chair and
FinTech Census Founder
Mark Skelsey, FinTech Australia Director of PR and Communications
The fintech sector is evolving rapidly in Australia and
around the world. EY is committed to working with
fintechs, investors, regulators, governments, education
institutions and accelerators/hubs to help the industry
realise its potential. An important part of our
commitment has been to deliver comprehensive,
focussed and prescient thought leadership to help define
the industry, identify the challenges and cast light on the
way forward.
For the second year, the EY FinTech Australia Census
provides an exciting contribution to this commitment and
recognises the strong global connection within EY
supporting the Fintech industry. It is essential research
conducted with the Australian fintech community by EY
Sweeney. It delivers a powerful fact base, combined with
broader insight to inform and inspire those involved with
the sector.
We are proud to be collaborating with FinTech Australia
on this significant initiative and pleased to be able to
share the findings.
Rowan Macdonald, Partner Financial Services, Ernst & Young
Services Pty Ltd, Australia
Meredith Angwin, Partner Financial Services, Ernst & Young
Services Pty Ltd, Australia
FinTech Australia
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About the research
Background
FinTech Australia was founded in March 2016 and is the
peak body for fintech organisations in Australia. The
board of FinTech Australia focuses on four major streams
of activity on behalf of its members – advocacy, support,
promotion and connection.
As part of this charter and in recognition of the growing
and dynamic nature of the fintech industry, FinTech
Australia identified the need to profile the organisations
currently operating in Australia to provide definition for
the sector.
In line with EY’s deep experience in fintech, coupled with
the knowledge/experience of EY Sweeney, EY was
commissioned to conduct a census of fintechs in Australia
over the last two years. A broad research program was
set in place in collaboration with a FinTech Australia
steering committee. The research was conducted
between August and September, 2017.
This report presents the key findings and it will act as a
powerful platform for FinTech Australia when engaging
with members, stakeholders, commercial partners,
regulators and government departments.
A dedicated website providing further access to the data
and insight from EY fintech professionals can be accessed
here.
Methodology
Quantitative research:166 online surveys
► 15 minute online survey
► Conducted with people currently working in the fintech industry
► 57% of participants are founders of fintech companies, 55% are CEO's and 16% are heads of functional areas
► A mix of members and non-members of FinTech Australia
► Contact lists provided by FinTech Australia
1
Vox-pops:16 interviews
► Short interviews at Melbourne and Sydney hubs
► Conducted with fintech leaders
► Interview quotes are on the EY FinTech Australia Census 2017 microsite
3
Qualitative research:10 in-depth interviews
► 45 minutes in length
► Conducted with leaders of the fintech community
2
Other EY fintech reports
In particular, three EY reports have been referenced in this Census report and the microsite:
► The Fintech Adoption Index 2017
► EY UK Fintech Census 2017
► UK FinTech: On The Cutting Edge – An Evaluation of the International Fintech sector 2016
4
Fintech founders 8
Industry leaders (CEOs, Directors) 2
The research program was designed and run by EY’s dedicated market research practice, EY Sweeney
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Fast facts: Sector profile 2017
Business based
End customers (multiple response – excl. don’t know)
Age of company (excl. didn’t answer)
Company stage
Wealth and investment
Lending
Data analytics / Big Data
Payments, wallets and supply chain
Asset management and trading
Regtech
Business tools
Marketplace-style / peer-to-peer solution
Identity, security and privacy
Blockchain/distributed ledger solution
Insurance/insurtech
Accelerator/venture capital
Crowdfunding/fractionalised investing
Challenger/neo bank
Digital/Crypto currencies and exchanges
Other
54%
19%
1%
9%
12%
4%
0%
2%
NSW
VIC
TAS
SA
NT
QLD
WA
Overseas
Biggest competitors (excl. none)
Retail consumers
Sophisticated investors
SME and/or other startups
Corporate
Banks and other FSIs
Government
Other
45%
22%
35%
33%
43%
14%
15%
55%
Net B2C
71%Net B2B
Number of employees (median)
Type of fintech (multiple response)
5Full-time
2Part-time
30%
23%
18%
16%
11%
10%
10%
10%
6%
5%
5%
5%
5%
4%
4%
9%
36%Incumbents
29%Other fintechs
in Australia with a similar
offering
27%Overseas
fintechs with a similar offering
7%Other
20172016
57%71%
43%29%
Pre-revenue
Post-revenue
The Australian fintech landscape
20172016
20%31%
44%48%
36%21%
1 year or less
2 to 3 years
> 3 years
Net 2 yrs or more
79%
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In 2016, FinTech Australia had identified
some 250 fintech companies in Australia.
We now estimate there's close to 600.
From Hobart to Townsville, Perth to Gold
Coast - great fintech companies are
emerging everywhere.”
Danielle Szetho, CEO
FinTech Australia
The Australian fintech landscape
The Australian fintech industry has matured over the
past twelve months. It has evolved from being quite a
fragmented tech sector fuelled by the belief and passion
of the founding firms to one that has much greater
definition and structure. It is an industry in Australia
that has meaningful scale and an ecosystem that
delivers effective support to help breed success. It is
still early days, but the transition in a short period of
time has been pronounced.
It’s estimated that the number of fintechs operating in
Australia is now approaching 600, having more than
doubled since 2015. This growth in the number of firms
is an important metric when assessing the strength of
the industry, it can be read alongside a number of other
industry characteristics that further underline the
contention that this is a more mature tech sector.
► A greater proportion of fintechs have been in
business for more than three years and that points
to stability and resilience.
► The proportion of Australian fintechs that are now in
the post revenue stage has also increased indicating
that the products/service offerings are in demand
and filling gaps in the market.
► What falls under the ‘fintech’ banner is now much
broader (think RegTech, cyber/digital security, Data
Analytics etc.) and firms that would see themselves
as ‘fintech’ are stretching far and wide into other
tech industries (e.g. Agtech, etc.)
Perhaps the most important determinant of this
bourgeoning maturity for B2C firms is the level of
receptiveness of the Australia public. In EY’s recently
released Fintech Adoption Index conducted across
twenty markets we saw…
► The global average for fintech adoption was 33%
► Australia ranked 5th with a 37% adoption rating.
While in the shadows of the quite different markets
of China (69%) and India (52%), Australia is on par
with other developed economies with similar
financial systems (e.g. US and UK).
► This level of adoption shows that fintech is now at a
tipping point where it is poised for mainstream
adoption.
The prevailing outlook of many of the fintech industry
leaders is optimistic, if not bullish about what the future
holds. While the risk is still high and hard graft is the
norm, there is recognition that there is greater support
and that the barriers to success while still pronounced
are less than they were.
The Australian fintech landscape
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While there is undoubtedly momentum and more
success stories will come to the fore, it is still important
to recognise that there is no yellow brick road. The
archetypal fintech is lean (median of eight staff) and
founders are kept awake at night by ever-present
factors like future funding, customer uptake, cash burn
rates, regulations, licensing, amongst other
fundamental business drivers. They are optimistic but
there is an undercurrent of anxiety.
The fintech industry in Australia operates in a highly
competitive local, regional and global environment.
Success in the future will be predicated on the level of
support that continues to be set in place – support that
will enable fintechs to flourish. This summary report
both profiles fintechs and provides clear insight into
what they need to forge ahead. The industry is at a
point where, as one luminary put it, “we have moved
past the exuberance phase.” The early hype has
levelled out and the industry is now more robust and
defined.
The Australian fintech landscape
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Drivers of success
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Drivers of success
Commercial success is the holy grail for fintech
organisations, with all aspiring to have a major impact in
the specific segment of the financial services market in
which they operate. Alongside profiling the fintech sector
in Australia, a key area of focus was identifying the main
factors that will underpin success for a fintech and the
challenges potentially confronting fintech leaders.
The topic was explored from a number of angles, including
ranking the main internal and external challenges. What
emerged underlines the complexity inherent in launching a
successful fintech, with a range of forces potentially
conspiring against ambitions being realised. It also throws
the spotlight on where those working to support the sector
can focus to set in place the right infrastructure and
conditions to maximise success.
Consistent with last year, five key drivers of success were
isolated. Importantly, these also build on the extensive
analysis conducted by EY on the international fintech
scene1. These drivers of success collectively create an
ecosystem that will help the Australian fintech industry
flourish.
For each driver of success there are a number of variables
that can impact on fintechs – either at an industry-wide
level, or from an individual firm perspective. We have
isolated these factors as the discussion around the drivers
unfolds over the coming pages.
The 5 drivers of fintech success
1 Talent
2 Capital
3 Demand
4 Policy
5 Environment
1 EY: UK FinTech – On The Cutting Edge – February 2016
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The 2017 Census has again underlined that the ‘people’
side of Australian fintechs remains challenging. In most
cases they are lean businesses (a median of 8
employees) operating in a highly dynamic environment
and that can place significant pressure on the leadership
of the firms. We saw that 23% nominated ‘insufficient
time available to devote to the business’ as an internal
challenge; this challenge is heightened among smaller
fintechs in part because they may have other forms of
employment outside of the start-up.
The commitment required by founders is immense and
the personal risk real, but optimism invariably abounds.
The profile of fintech leaders shows…
► 83% of fintechs are founded exclusively by males*.
► They are highly educated (32% undergraduate; 54%
postgraduate).
► Those that are founders/CEOs of fintechs have
started on average 2.1 fintech businesses.
An area of great reflection for the management of
fintech firms is the calibre of their staff and the ability to
both attract and retain good people. A number of
observations can be made about the battle for talent…
► Limited pool in Australia… Half of fintech (52%)
leaders agree that there is a lack of experienced
start-up and fintech talent in Australia. Attracting
suitable or qualified talent is one of the top internal
challenges that they face.
► Specific profiles more challenging… Of those
fintechs that struggle to attract qualified or suitable
talent, the majority struggle with finding
engineering/software expertise (61%), followed by
sales (41%) and web development (33%). This year
fintechs are finding it less challenging to attract
design/user experience talent (42% down to 24%).
However, as the industry has matured, talent pool
shortages are marginally more evident for sales
professionals (35% up to 41%) and marketing
professionals (24% up to 29%).
► Diversity a challenge… The profile of fintechs
operating in Australia shows a marked gender
imbalance, with 76% of employees being male.
Overall female participation in the fintech workforce
has largely remained unchanged from last year (22%
last year and 24% this year). FinTech Australia is
actively working to address this skew and determine
what can realistically be done to address it in the
short and longer term. To improve participation of
women in the Australian fintech industry, the top
three methods suggested by survey respondents are
encouragement to follow STEM career paths (14%);
adjusting recruiting practices (14%); and change
company culture/policies (13%).
► Referral the lynchpin… While emerging government
initiatives such as the STEM pathway and
entrepreneur visas are likely to assist in the future,
talent is mainly recruited through contacts formed by
fintech co-founders, however as fintechs mature
reliance on recruitment agencies increases.
“Founders put a great deal of effort into researching and
thinking about what they want in a new hire so they can
find the right people. They also have to be flexible with
employment arrangements - part-time, internship, etc. -
to make it less challenging to find the right people. After
4 years and a few mistakes, I now know who I am looking
for to join our business, and have confidence they will be
successful.”
Aris Allegros , Founder
Moula
1 Talent
Drivers of success
61%
41%
33%
1
2
3
Engineering/software
Sales
Web development
Talent pool shortage (top 3)
23%Nominate ‘Insufficient time to devote to the business’ as an internal challenge
Base: Have faced challenges attracting suitable talent (n=76)
83%of fintechs have all male founders
*Note – this finding is based on a new question added to the Census in 2017
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Fintech leader profile 2017
Gender
Work status
Highest level of education (fintech founders/CEOs) Number of start-ups founded/started by fintech founders/CEOs
Current role
96%Work full-time
2%Work on casual basis
2%Work part-time
1%Studying part-time
54%Post graduate
4%Vocational certificate
32%Undergraduate
10%High school
5%
40%
20%
36%
1 2 3+0
40yrs
Average founder age at inception
2.1average
55%
16%
7%
2%
5%
1
2
3
4
5
CEO
Head of afunctional area
CTO
Support role
Other
83% of fintechs have all male founders
Drivers of success
Founder
57%
Yes
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Capital is the lifeblood of start-up fintechs and a
fundamental key to success is the ability to raise funds
and then manage burn rate each month. A number of
points can be made about both the access to capital and
the management of expenditure of the funds.
► Shallow but growing pool in Australia... The funding
of start-ups is a challenging and complex issue as
they need phases of capital stretching over many
years. Venture capitalists want early stage uncapped
upside and various profiles of yield. Feedback from
the in-depth interviews with fintech leaders suggests
that the capital situation has been improving with
more inflows of venture capital coming from within
and outside Australia.
► Mixed capital raising success… Although
successfully funded fintechs outnumber those that
fail to raise capital or couldn’t raise what they
desired, this doesn’t account for organisations that
may not be in existence anymore. Views in this
Census were primarily collected from fintechs that
remain in existence so there is a skew to fintechs
that were successful in their capital raising. Fintechs
that have accessed commercial funding are more
likely to have raised the amount of capital required.
► Solid averages… Of those fintechs that indicated
they have successfully raised capital to date, on
average each has raised $4.1m. This is an increase
on what was seen in 2016 ($3.9m raised) and is
indicative of a maturing industry. Fintechs in
existence for more than three years have on average
raised $5.2m of capital to date in comparison
younger fintechs aged one year or less have raised
on average $2.1m of capital to date.
► Private funding dominates… As was seen in 2016,
most fintechs in Australia have received some
private funding (72%). Six in ten (57%) accessed
some commercial funding and on average have
raised $4.2m in capital; this is greater than the
average amount of $2.2m raised by fintechs that
exclusively accessed private funding.
► Realising profit… One in seven fintechs stated that
they are currently profitable. Of those that have not
started to realise profit, their current burn rate is on
average $115k a month. This is an increase in what
was seen last year where the burn rate was $84k
month.
► Managing burn rate… Average burn rates are
particularly high among fintechs that have received
funding and scaling up their business, with the
increased burn rate reflecting the maturing of
Australian fintechs. While nearly 30% of fintechs
have a monthly burn rate in excess of $100k, the
majority of these businesses are skewed towards
having raised in excess of $10m in capital to date
(i.e. larger, more funded fintechs). For this segment,
the remaining runway is typically more than a year,
but there is still a sizeable proportion (37%) that only
have up to a year before the cash reserves dry up.
“…the lack of cash flow gave us an opportunity to learn
how to prioritise business resource and stay creative to
make the most use of the limited cash flow; we have
been constantly thinking about how to educate and
accelerate our partners to set up quickly and acquire
customers.”
Joel Ramirez, Co-founder & General Manager,
Financials for Office 365
2 Capital
Drivers of success
14%of fintechs are currently profitable
39%Had their expectations of capital raising experience met
72%Private funding
57%Commercial funding
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At the heart of any start-up or new venture is the ability
to identify a gap in the market - a latent need that can be
met by delivering a compelling offering. However the
gaps aren’t always obvious and the solution needs to be
seen as genuine and positively differentiated in the
market.
The key insights from the Census and some broader
global research conducted by EY are…
► Fintech Adoption continues to grow… EY recently
conducted a large scale consumer study across 20
countries exploring the level of fintech adoption.
China dominates the global landscape, with adoption
still comparatively high in Australia (37%) and it has
tripled over the past two years (13% adoption in
Australia in 2015).
► A more diverse profile… The fintech industry in
Australia is maturing and broadening. There is now
greater collaboration into other sectors (e.g. Agtech)
and an improving working relationship with the
incumbent/traditional players in the financial
services industry.
► Solution-centric… The majority of fintechs believe
that the key reason that consumers or businesses
access their products/services revolves around
offering ‘more effective solutions’ to their customers.
Having a “seamless user experience” is also
fundamental, coming in second on the list of areas to
focus.
► Cost of customer acquisition and retention… While
EY’s research shows the rapidly growing usage of
fintechs, one of the core external challenges for
organisations operating in Australia is the ‘cost of
customer acquisition’. This was cited as a challenge
by one in two fintechs surveyed.
In terms of demand profile, Australia is ranked fifth out
of 20 markets around the globe; with some of the key
observations being…
► Tech-savvy younger generations are high adopters of
fintech, particularly of money transfer and payments
services, however older generations also
demonstrate high acceptance of such services.
► Australia is the fourth most developed money
transfers and payments market, and the sixth most
developed insurance Fintech market.
► Overall Fintech adoption in Australia is expected to
increase in the next 12 months from 37% to 43%.
► While adoption will continue to increase amongst
young adults, usage is expected to increase amongst
older generations who are warming to idea of
conducting financial transactions digitally.
“There are those who believe that fintechs struggle to
translate the innovation and great customer experience
that they create into real customer adoption. The EY
FinTech Adoption Index suggests that thinking is now
outdated. Fintechs are not only becoming significant
players in the financial services industry, but are also
shaping its future.”
Imran Gulamhuseinwala,
EY Global FinTech Leader
“Congratulations to the small businesses of Australia. Pin
Payments has received enthusiastic support for our
payment solutions, even whilst being a relatively new
brand to the space. Our customers recognise how we're
trying to help their day-to-day, and in return are patient
and generous with their feedback. So from our
perspective, Australia is a great market to launch a
fintech business in.”
Chris Dahl, Director,
Sales & Growth at Pin Payments
3 Demand
Drivers of success
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The EY global fintech adoption index
Source: EY Fintech Adoption Indexhttp://www.ey.com/gl/en/industries/financial-services/ey-fintech-adoption-index
FinTech adoption rates across our 20 markets Comparison of FinTech adoption in six markets between 2015 and 2017
Notes: The figures show adoption rates per market for the six markets for which a comparison is available. All figures are shown in percentages.
*Belgium and Luxembourg
**Hong Kong SAR of China
Notes: The figures show FinTech users as a percentage of the digitally active population. All figures are shown in percentages.
The Australian fintech landscape
Australia Canada Hong Kong Singapore UK US
2015 adoption 2017 adoption
37
1318
8
3229
15
23
14
42
17
33
Australia has one of the fastest growing fintech marketsAustralia’s fintech adoption rate is ranked 5th, with a 37% adoption rating
Meredith Angwin, Partner
Financial Services, Ernst & Young Services Pty Ltd, Australia
Australians are adopting fintech services and solutions quickly
and this will continue to gain momentum; we have always been
early adoptors of new technology and services that make our
lives easier and are built around what we want rather than what
a financial services incumbent thinks we want.”
37%
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Policy, regulation and broader government support are
fundamental dimensions in creating a healthy and
sustainable fintech ecosystem. There is a need for policy
momentum to be maintained and for there to be a
proactive fintech agenda at all levels of government. We
explored a wide range of potential growth initiatives and
those considered most effective in the eyes of Australian
fintech start-ups are listed below.
Tax tops the list
Nine in ten (87%) participants agree that the top
effective growth initiative is to ‘make the research and
development tax incentive more accessible to start-ups’,
followed closely by providing ‘Capital gains tax relief for
tech start-ups first incorporated in Australia’ (85%
effective). Founders interviewed are quite positive about
the level of tax incentive support provided in the past 12
months and would like this to increase.
Access to open bank data
With open banking being under independent review in
September 2017, the anticipation of positive
recommendations for the setup of an open banking
regime in Australia is palpable.
Customer acquisition… There is strong recognition that
without open bank data, fintech start-ups will continue to
face much greater customer acquisition costs. Access to
consumer data protected within this system would
enable them to more easily identify attractive customer
segments and the likely demand for particular products.
85% of fintechs said that ‘Government mandated open
data protocols’ would be an ‘effective’ initiative to grow
and promote the industry up from 76% last year.
New payments platform… Most fintechs (82%) believe
that providing more transparent access points for
fintechs to connect to the New Payments Platform is one
of the top effective industry growth initiatives; this
reveals that fintechs are unconvinced about the ease of
access to this infrastructure.
Licensing / sandboxes
As fintech start-ups move forward with their technology
solution, ASIC licences are an important part of a go to
market strategy.
Licence uptake… Six in ten (62%) fintechs surveyed do
not currently have one of the three key ASIC licences
(financial services licence, credit license or market
infrastructure licence).
Regulatory sandboxes… Over the last 12 months, ASIC
expressed a desire to strike an appropriate balance
between encouraging innovation whilst providing an
appropriate regulatory framework for the Australian
fintech industry. At the end of 2016, ASIC launched the
regulatory sandbox framework which provides fintechs
with limited freedom to operate within set guidelines
while their product solution is in development. The
Census data indicates that only 1% of Australian fintechs
currently use an ASIC regulatory sandbox, however, a
further 9% intend to use this in the next 12 months.
“Open data is a big thing for us. As we are a company that
tries to get the banks to price risk better, more real
insights into the data we have the better we would be
able to help. There is a growing community which
requires a lot more conversation around what data is
available and suitable, as well as a lot more collaboration
to make sure that the solution most beneficial to
consumers can be found.”
Ranin Mendis, Founder & CEO
Loan Dolphin
“One of our biggest challenges today is to effectively
engage and collaborate with the Government to
springboard Australian innovation. We do believe
partnering with the government is necessary but finding
the best approach for proof of concepts is still a work in
progress.”
Joanne Cooper, Founder & MD
ID Exchange
4 Policy
Drivers of success
6 EY: UK FinTech – On The Cutting Edge – February 2016
ASIC financial services license
ASIC Credit License
ASIC Market infrastructure license
Banking license
32%
11%
1%
1%
16%
6%
2%
2%Currently have
Looking to aquire
Licenses
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Introduction About the research Drivers of successThe Australian fintech landscape Future focus Contact usDrivers of success
Net effective
2017
Net effective
2016
Make the research and development tax incentive more accessible to start-ups
87% -
Government mandated open data protocols 85% 76%
Capital gains tax relief for tech start-ups first incorporated in Australia
85% 87%
Reduced taxes, such as payroll taxes, which apply when hiring employees
83% -
More transparent access points for fintechs to connect to the New Payments Platform
82% -
Removing barriers to the creation of new banking licences
81% -
An expanded and more flexible regulatory sandbox environment
78% -
A cross-industry solution to share know-your-customer and identity validation information
75% -
Easier access to skilled migration visas to be able to hire new employees
67% -
Programs and grant assistance to access the existing Government Launchpads in Tel Aviv,
Shanghai, Berlin, Singapore and San Francisco64% 64%
Opportunities to pitch for Government tenders and projects
58% 61%
Creation of more referral agreements between ASIC and Regulators in other markets
57% 66%
Creation of more Government Launchpads in other overseas markets
54% 56%
A government-supported digital sovereign currency (i.e. a Digital Australian Dollar)
40% -
60%
51%
55%
57%
42%
40%
36%
43%
34%
25%
27%
21%
15%
16%
27%
34%
30%
26%
40%
40%
42%
32%
34%
39%
31%
36%
39%
24%
11%
11%
10%
11%
14%
16%
14%
19%
23%
23%
30%
32%
32%
38%
2%
4%
5%
6%
4%
3%
8%
7%
10%
12%
13%
11%
14%
22%
Very effective Fairly effective Not very effective Not at all effective
Base: n=166 (All respondents)Q26a. How effective do you believe each of the following initiatives might be for growing and promoting the Australian fintech industry?
Potential growth initiatives
85%Government mandated open data protocols is an effective initiative to grow and promote
the industry
“We have a policy directive from the Federal Government
that innovation and fintech is important, however there is
a large gap to how this is supported by the R&D tax
incentive; clearly the current program needs a shakeup to
make it effective for start-ups.”
Stuart Stoyan, Deputy Chair and FinTech
Census Founder
FinTech Australia
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Most of the fintech start-ups are lean operations, having
relatively small numbers of staff, but a big vision. The
research has underlined the importance of strong
support networks beyond the founder, the board (if
there is one) and investors. The ability to effectively
leverage peer and industry support is imperative.
In the Census, the use of accelerators/incubators and
co-working spaces was explored with Australian fintechs.
A number of points can be made about their usage and
impact.
► The power of hubs… Accelerators and incubators are
considered an important contributor to the success
of the fintech industry in Australia by 60% of Census
participants. In comparison, last year the importance
was higher (69%) indicating that whilst hubs are
critical for support, the industry is coming out of the
nursery stage. Those in hubs experience the benefits
almost daily with planned and unplanned
conversations helping them take constructive steps
in the right direction.
► Mixed usage of co-working space… Users of hubs
describe the workplaces as a source of ideas,
experience, insights, expertise, accommodation and
support. However, they haven't cut through to all.
Just over half of fintech start-ups surveyed (55%)
have ‘never used a shared workspace’. Some of
those that embarked on their start-up journey
without the support of a hub, lamented not having
found one from which to launch their venture.
► Lower cap firms more reliant… Typical usage of co-
working spaces is more limited among fintechs that
have raised in excess of $5m of capital to date or are
greater than five years old. These businesses have
evolved toward renting their own office space and
have surpassed their initial requirements for co-
working spaces.
► High usage amongst the converted… Hubs are
accessed on average over two times a week, with
three in ten fintechs accessing these between five
and seven times a week. Frequency of usage of co-
working spaces is higher among fintechs based in
NSW which reflects that NSW is the key financial
market in Australia, housing the greatest number of
fintech hubs/co-working spaces.
► Government support is growing… In the past 12
months there has been significant activity by State
governments to create new and expanded hubs
which will accommodate fintech start-ups. This is
demonstrated by the Sydney Start-up Hub which
when open in late 2017 will accommodate some
2,500 people across a range of incubators and
accelerators over 11 floors. In Victoria, the State
Government released a tender in June 2017 for a
fintech operator to launch a dedicated fintech hub /
accelerator in the Docklands digital precinct.
Accelerators and incubators are an important contribution to the success of the fintech industry
agree
60% Neither/nor
25% disagree
15%
5 Environment
Drivers of success
“Moving into a fintech focused hub has been of massive
help. We are supported by simply being in such an
environment and surrounded by like-minded and
intelligent people who are building their own businesses.”
Matt Jones, Co-founder
Mosaic Money
“The fintech industry in Australia has moved through the
initial phase of exuberance and is now settling into a new
stage of maturity which will see consolidation of more
commercial ideas & focus on consumer & small business
problems that need to be solved at scale.”
Aris Allegros, Founder & CEO
Moula
“If we had done this independently without being part of
the ecosystem and community such as Stone and
Chalk and H2, we would not have achieved what we have
during the last two years. As a result, we were introduced
to second-tier banks who joined our platform which we
would otherwise not have been able to expand to.”
Ranin Mendis, Founder & CEO
Loan Dolphin
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6%
10%
20%
24%
14%
24%
Revenue decline
Nil growth
1% to 100%
101% to 300%
301% to 700%
>700%
Outlook and optimism
The challenges confronting any start-up in any industry
are recognised as being profound – and it was a
sentiment that echoed through our interviews with
fintech industry leaders. They spoke of the wide range
of potential challenges that can emerge on the journey
to having true market impact and that they can’t all be
overcome by the passion and focus of the team.
However, what has emerged in the study is that there is
deep self-belief and a bullish outlook prevailing in the
industry.
Among post revenue fintechs, year on year revenue
growth is substantial. Fintechs indicated median growth
of 208% on their revenue in June 2016, driven by
a cohort of 24% of fintechs that have experienced
growth in excess of 700%. Higher growth rates are also
experienced by fintechs under three years in existence,
starting from their lower bases. Revenue growth
stabilises somewhat once fintechs generate in excess of
$100k revenue a month (127% growth rate on June
2016).
The assured outlook is further emphasised when we
look at perceptions around the relative competitiveness
of fintechs in Australia…
► Internationally competitive… Two thirds (63%) of
fintechs agreed that Australian fintechs will be able
to compete internationally. Forty-five percent
agreed that Australian fintech organisations will be
able to ‘win’ against international peers.
► Local competition… There are mixed views on the
perceived quality of domestically based
organisations (34% ‘agreed’ that there is a lack of
quality fintechs in Australia; while 38% disagreed).
There is a positive outlook in the industry, founded on a
belief that there is a competitive advantage for
Australia fintechs. The three key elements of this
potential competitive advantage are considered to be…
► Regulatory environment… Australia’s sophisticated
and trusted regulation of financial services provides
a solid foundation for the development of solutions.
► Advanced financial services industry… Australia’s
advanced financial services and wealth management
sector delivers both commercial experience and
creates opportunities.
► Access to Asia… Australia is a good starting point to
develop their export solutions – particularly in the
Asia Pacific region and proximity to capital sources
from major Asian centres such as China.
Annual revenue growth %
Median post revenue growth
Future focus
Base: Companies in post-revenue stage excluding ‘prefer not to say’ (n=49)
Revenue in June 2017 compared to June 2016
June 2017 vs. June 2016
208%
“The disruption of financial services is most likely to come
from digital giants from developing markets such as China
or even those technology giants from the US who are
extending their platform dominance into financial
services. In the face of this, many local fintech start-ups
are likely to be acquired by either global players or local
incumbents and should be preparing for that possibility by
keeping in close contact with potential acquirers.”
Simon Cant, Chair
FinTech Australia
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Global reach
Each major fintech centre around the world has its own
unique dynamics – creating both opportunities and
boundaries for those domiciled in each location. These
are defined and influenced by a wide range of factors
that predominately revolve around the five ecosystem
pillars. Some fintechs operate within these parameters,
seeing themselves as more domestic or regionally
oriented solutions, others have international aspirations
(if not current presence).
The Australian landscape is acknowledged as unique, as
many of the fintechs operating here need to do so within
a heavily regulated environment. They also have the
challenges relating to talent, capital, demand, policy and
environment.
These ‘constraints’ are real and need to be recognised,
but it was also interesting that several leading industry
commentators felt the Australian fintechs could be more
globally ambitious. This was not intended as a criticism
per se, more a recognition of the calibre of the
proposition and the potential to cross borders. It was felt
that other international hubs, like the UK, are perhaps
more geared to driving globally-scaled disruptive
innovation. It’s a point that will no doubt provoke
considerable discussion and debate and that is, in itself,
important for the industry.
Regardless of the perception and the belief that some
fintechs could be more globally assertive, there is
significant pending focus across borders. More fintechs
are intending to “Expand or expand further overseas” in
the next 12 months; this has increased from 38% to 54%
of fintechs this year. Among the fintechs that are
looking to expand, the top three markets for expansion
are the United Kingdom (49%), Singapore (40%) and the
United States (38%).
From the Australian fintechs who have already ventured
beyond our shores, their advice is consistent;
Among fintechs that are not considering
expanding/expanding further overseas reasons include
business plan is currently focusing on the local market
growth (67%), followed by lack of time to investigate
potential overseas markets (22%).
“Start-ups know that expanding beyond Australia’s
borders will lead to a significant increase in customers
and investors, which is why they believe they need to
solve problems for people globally. It takes a creative
idea and solution, but it also requires effective strategic
execution of the idea, along with a global network and
community to help tap into local regulatory knowledge.”
Danielle Szetho , CEO
FinTech Australia
“Incumbent institutions struggle to imagine the rules are
changing and their old business models are not
sustainable. To keep up with the shift, they need to quickly
find new value chains that are inclusive of the customer.
This will be vital to their political and financial future.”
Future focus
Future outlook
38%
2016Expand/expand
further overseas 54%
2017
Don’t go it alone, you need to form trusted
partnerships in your target markets and
work with those who understand the
cultural and consumer norms.”
Don’t underestimate the licencing
challenges in each and every market; be
prepared for this to take considerable
time, patience and resources.” Katryna Dow, Founder & CEO
Meeco
“I am delighted to see the increase in Australian fintech
firms that are setting global goals for their businesses.
More than half are now focused on expanding overseas
in the next year. Supporting these creative start-ups is a
major focus of Austrade, especially through our ‘Landing
Pads’ program in five global innovation hubs, which is
already propelling many clever Australian businesses to
new heights.”
Stephanie Fahey, CEO
Austrade
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An effective ecosystem
In the fintech sector in Australia, optimism abounds,
however there is an undercurrent of realism in the
community and amongst astute observers that tempers
the enthusiasm. There is recognition that while
Australian start-ups are progressive and agile, to truly
succeed they will require significantly more support.
While there are many strengths, Australia doesn't have
the financial services scale, capital for investment or
tech industry presence of some global peers. In that
context, the need to create the most effective
ecosystem to foster and support growth is all the more
important.
As outlined in this report and supported by broader
global EY analysis, the most effective ecosystem is one
that has five pillars – talent, capital, demand, policy and
environment. This research plays a pivotal role in
helping to give life to the ecosystem as it not only
profiles and defines the fintech start-ups, but provides
insight into how they are performing and what is
required across each of these dimensions.
The research has shown that there is a buoyant and
vibrant fintech industry in Australia that is increasingly
mature. It has also affirmed that there is no doubt
Australia is regarded as a tier one fintech nation and the
potential for success is profound. However, what we
have also seen through this study and others conducted
by EY is that the gulf between the leading nations (and
cities) and those left in their wake will become greater as
fintech solutions are embraced in the mainstream. Time
is tighter than may be assumed.
“Australia’s 600-odd fintechs now employ over 5,000
people, are growing at over 200% per annum and are
raising serious amounts of capital. Combined with the
strong support from Federal and State governments
and corporate partners, we have now reached a
tipping point where there is enough maturity in
Australian fintech to enable a robust eco-system.
We’re not there yet, but the foundation is built for
Australia to take a leading regional role in fintech.”
Stuart Stoyan, Deputy Chair
and FinTech Census Founder
FinTech Australia
Future focus
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Census participants*
* Note – Fintech participants listed above specifically provided their permission to be cited in this report
Future focus
Acceleration Venture Catalysts CoinJar FlyFree.ly Map My Plan Peer Estate SmartFee
Advice RegTech Credit Savvy Frollo Meeco Pelikin SocietyOne Holdings Pty Ltd
Adviser Network CrowdfundUP FundingPro Metamako Picture Wealth Pty Ltd Spotcap Australia
Adviser Ratings CXi Software Get a Better Rate MoneyPlace Financial Mappers Study Loans
AgriDigital DigitalX GiftInvestor Moneysoft Plenty Surefire Systems Pty Ltd
AIRSCAPE DirectMoney H2 Ventures Moneytech PractiFI Tappr
Airwallex Douugh Imperium markets Moneytree PrimaryMarkets Tempus Adventus
Apex Capital Partners Ducksoup INAMO Moroku Promis Network Pty Ltd The Change Compass
Astute Wealth Advice Pty Ltd e4 Australia InfraRisk Mosaic Money Pty Ltd Prospa The Currency Shop
Audeamus Risk Edstart Instarem Pty Ltd myadvisor.ai Proviso The Invoice Market
BankVault EFTlab Investment Control Systems MyFiziq Limited Quantifeed ThinCats
BetaSmartz Equitise Investum Neu.Capital QuietGrowth Trade Ledger Pty Ltd
Beyond Merchant Capital Estate Baron InvoiceInterchange New Arenas Capital QxBranch Upcoming Floats
Bigstone Capital Pty Limited Expense Check InvoiceX On Deck Capital Australia Pty Ltd Red Marker Valiant Finance Pty Ltd
Bit Trade Australia Pty Ltd Ezidox Pty Ltd iSignthis Ltd OneCheck Pty Ltd Reinventure Verrency
Bravura Solutions Limited Fabric iungo OnMarket BookBuilds Round Table Apps Waddle
The Brick Exchange Fair Go Finance Jelix Ventures Open Orbit RoyalPay WealthNation
Carrots Money Fin15 Joust Open Sparkz SavR International Payment and Transaction Monitoring Association (IPTMA)CashRemit Pty Ltd Financial Mappers (Plencore
Wealth Ltd)Kikka Capital Optimo Financial Pty Ltd SelfWealth
CCFS Likwidity OurMoneyMarket ShareEquity Zip Money
Claim Central Consolidated Finhaus Labs Link4 Australia PayDock Sidekick Industries
Cloud Insurance FirstStep Investments Australia Living Room of Satoshi Paypont Australia Six Park
Cloudcase Software Solutions Flash FX Mafematica Payreq Skippr Cash Flow
Contact us
EY Sweeney
Marc L’Huillier
Partner
Ernst & Young, Australia
Lewis Jones
Director - Melbourne
Ernst & Young, Australia
Aditi Kane
Manager
Ernst & Young, Australia
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Rowan Macdonald
Partner Financial Services
Ernst & Young, Australia
Meredith Angwin
Partner Financial Services
Ernst & Young, Australia
Olivia Willee
Partner Financial Services
Ernst & Young, Australia
Marla Heller
Partner Financial Services
Ernst & Young, Australia
FinTech Australia
Danielle Szetho
FinTech Australia CEO
Simon Cant
FinTech Australia Chair
Stuart Stoyan
FinTech Australia Deputy Chair and
FinTech Census Founder
Mark Skelsey
FinTech Australia, Director of PR and
Communications
@ausfintech (twitter)
http://www.fintechaustralia.org.au