When it comes to fintech, necessity is the mother of innovation. Every day new devices, software and technology hit the market and the financial industry needs to be able to keep pace.
Meanwhile, consumers are demanding digital ways to manage money, banking and investments that cater to their on-the-go lifestyles.
Our world is also becoming increasingly more globalised so these solutions not only need to be cutting edge, but they must also have global appeal and reach.
It’s this necessity that’s spurring Australia to make great strides forward in fintech innovation, the results of which may see this country emerge as a rising star in this field.
Just this past month, nine Australian companies were listed in the global 2016 Fintech 100 list, while another six landed a spot in the 50 emerging stars list.
What makes this country the ideal incubator environment for fintech innovation on a global scale? In short, a perfect combination of consumer demand, government support and private-sector interest.
Consumers push for progress
A survey conducted by Frost & Sullivan this year forecast that the Australian fintech sector is on the verge of a boom. It predicted the compound annual growth rate for fintech will be 76.36 per cent and reach A$4.2 billion by 2020.
One of the main causes for this projected growth stems from consumer demand. There is a wealthy demographic in Australia between the ages of 18 and 34 who expect improved financial services to meet their always-on, mobile lifestyle.
This demographic is looking for digital payments via smartphones, and/or web-based tech to make payments, and manage finances and trades. They want these options to be provided to them at a low cost, available 24/7.
US-based fintech company Acorns was able to tap into this Australian demographic with unprecedented success. The app received 70,000 downloads in two months, which beat the company’s expectations.
According to Reuters, “The ‘virtual piggy bank’ chose Australia as its first foreign market thanks to the country’s deep internet and mobile penetration and tech-savvy population”.
Government support, imperatives and structure
One of the major driving forces of fintech innovation in Australia is the support offered by the government. Developing fintech is not merely an option supported by the Australian government, it’s a priority, which should come as no surprise when you take into account the government’s overall dedication to digital transformation.
However, it helps that this priority has the full backing of Treasurer Scott Morrison.
Mr Morrison states on the Treasury website that “The Turnbull government wants to offer homegrown and offshore fintech innovators an opportunity to develop and refine new products and services in the Australian market through a regulatory system that allows them to be frictionless through their scale journey while still becoming regulatory match fit for deployment into domestic and global markets”.
Private sector initiatives
In addition to the support of the government, there are also private-sector funded initiatives that are spurring fintech innovation in Australia. Examples include:
- Stone & Chalk is a Sydney-based independent, not-for-profit fintech hub. The company’s overarching objective is to foster and accelerate the development of world-leading fintech start-ups. They consider themselves a physical ‘centre of gravity’ for the local fintech ecosystem.
- Tyro Fintech Hub, located in the heart of Sydney’s financial district, is a space where fintech entrepreneurs can work and collaborate, find mentorship, investors and even global contacts. This is Australia's first location of its kind for start-ups that’s specifically tailored to the full spectrum of fintech.
While China topped the fintech 100 this year, a meteoric rise might be in the near future for Australia. With the current high levels of consumer demand, government support, and private sector interest, Australia is an ideal incubator for fintech innovation, the results of which, may change the future of fintech on a global scale.
Brian Manning is the co-founder and president of Centric Digital, a global digital transformation firm that specialises in transforming business models, user experiences and operational processes of traditional companies for the digital age.
Mr Manning will be speaking at Collab/Collide 2016 in Melbourne on 3-4 November.