Introduction About the research The Australian fintech landscape Drivers of success Future focus Contact us

EY FinTech
Australia Census
2017
Profiling and defining the
fintech sector

FinTech Australia
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Introduction About the research The Australian fintech landscape Drivers of success Future focus Contact us

Contents

5 Introduction

7 About the research

8 The Australian fintech
landscape

12 Drivers of success

22 Future focus

27 Contact us

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Over the last year, the Australian fintech industry has matured
Post-revenue fintechs Key business challenges decreasing Future outlook
A greater proportion are now post revenue Suitability of systems and viability of business More fintechs are looking to expand overseas in
models are less likely to be internal impediments the next 12 months

2017

2016 Creating suitable 2016 2017
Expand/expand
2016 2017
systems and
processes 47% 31% further overseas 38% 54%
71%
57%

2016 2017
Business model
viability 37% 25% Top 6 markets for potential expansion (excl. don’t know)

United Kingdom 49%

Singapore 40%
Median revenue growth (post revenue companies)
Year on year post revenue growth has been substantial United States 38%

New Zealand 27%
Revenue decline 6%
Hong Kong 22%

Nil growth 10% Canada 22%

1% to 100% 20%

101% to 300% 24%
Median fintech post revenue growth
301% to 700% 14%

24%
208% June 2017 vs.
June 2016
>700%

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Fast facts: The fintech landscape in Australia 2017
Sector profile Industry gender profile Capital (multiple response – excl. don’t know) Government support and the
regulatory environment
Base: Gender (workforce participation)
NSW
83%
54%
76% 24% of fintechs have
72% 57%
VIC 19% male female all male founders
Private 25% Commercial
85% 39%
Other 28% 40% 32% agree government have a financial
funding funding
mandated open data licence
Fintech leader profile (founders/CEOs) protocols would be effective
Company age:
1 year or less 21% Education: Average no. of
54% post grad
start-ups founded: Average scale of last capital fundraising $3.0m 60%
2 to 3 years 48% agree accelerators/incubators are

>3 years 31%
32% under grad
2.1 Average capital raised to date $4.1m
important contributors to the
success of the fintech industry

No. of employees (median):
Talent
46% Outlook: Next 12 months expectations
Full time 5 Agree that
attracting Monthly burn rate
Part time 2 qualified or
Top 2 talent shortages: suitable talent 75% 63% 54%
is an internal Average burn rate
Grow Grow Expand/
Engineering/software challenge (excl. profitable $115k revenue employee expand
61%
fintechs) rate further
Type of fintech (top 2) overseas
Sales 41%

30% 23%
Wealth and Lending Paying customers Company 71% 29%
investment Top 2 approaches to talent recruitment
stage: Post- Pre
revenue revenue
No. paying
Founders/ employees/ 39%
personal contacts customers 5% 21% 21% 24% 29%
(post revenue)
End customer profile Globally competitive
Recruitment agencies 17%
None 1 to 10 11 to 50 51 to 500 >500
55% only
B2C
25%
Retail consumers 45% 63%
Sophisticated investors 22% agree Australian fintech companies
will be able to compete
Both Relationship with incumbents Median fintech post revenue growth internationally
30%
Banks and other FSI’s 43%
40% 45%
only
B2B
SME and other start-ups
Corporate
35%
33%
nominate “building partnerships with 208% agree Australian fintechs will be
41% banks and other financial institutions” June 2017 vs. June 2016 able to win against international
71% Government as a key external challenge fintechs
14%

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Introduction

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FinTech Australia
Welcome to the second EY FinTech Australia Census 2017. The fintech sector is evolving rapidly in Australia and
FinTech Australia has continued its successful collaboration with around the world. EY is committed to working with
Ernst & Young Services Pty Ltd (EY) and Ernst & Young Services fintechs, investors, regulators, governments, education
No.2 Pty Ltd (EY Sweeney) to deliver this important piece of institutions and accelerators/hubs to help the industry
research. This Census remains the most detailed and broad realise its potential. An important part of our
analysis of the Australian fintech ecosystem and at initial release commitment has been to deliver comprehensive,
in 2016, was the first census of its type globally. focussed and prescient thought leadership to help define
the industry, identify the challenges and cast light on the
This research initiative forms a critical part of FinTech Australia’s way forward.
efforts to foster a thriving fintech ecosystem. Australia’s fintech
industry is continuing to grow and is increasingly becoming the For the second year, the EY FinTech Australia Census
first choice for businesses and consumers when they are provides an exciting contribution to this commitment and
selecting a financial service. recognises the strong global connection within EY
supporting the Fintech industry. It is essential research
The Census gives us hard data and credible insights to back our conducted with the Australian fintech community by EY
advocacy work to drive the industry’s ongoing expansion. This Sweeney. It delivers a powerful fact base, combined with
year’s Census delivers new insights into key industry issues, broader insight to inform and inspire those involved with
including how we increase female participation, encourage the sector.
international expansion and remove barriers to growth.
We are proud to be collaborating with FinTech Australia
This report is also arguably the best source document to define on this significant initiative and pleased to be able to
the overall shape of Australia’s fintech industry and how we share the findings.
differ to overseas markets. It gives us fine-grain detail about the
established and emerging sub-sectors within fintech and helps Rowan Macdonald, Partner Financial Services, Ernst & Young
track the industry’s increasing maturity in terms of company size Services Pty Ltd, Australia
and revenue. Meredith Angwin, Partner Financial Services, Ernst & Young
Services Pty Ltd, Australia
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

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About the research
Methodology
Background

FinTech Australia was founded in March 2016 and is the
peak body for fintech organisations in Australia. The
1 Quantitative research:
166 online surveys 2 Qualitative research:
10 in-depth interviews
board of FinTech Australia focuses on four major streams ► 15 minute online survey ► 45 minutes in length
of activity on behalf of its members – advocacy, support, ► Conducted with people currently working in the ► Conducted with leaders of the fintech community
promotion and connection. fintech industry
► 57% of participants are founders of fintech Fintech founders 8
As part of this charter and in recognition of the growing companies, 55% are CEO's and 16% are heads of
and dynamic nature of the fintech industry, FinTech functional areas Industry leaders (CEOs, Directors) 2
Australia identified the need to profile the organisations ► A mix of members and non-members of FinTech
currently operating in Australia to provide definition for Australia
the sector. ► Contact lists provided by FinTech Australia

In line with EY’s deep experience in fintech, coupled with

3 4
the knowledge/experience of EY Sweeney, EY was Vox-pops:
commissioned to conduct a census of fintechs in Australia
Other EY fintech reports
16 interviews
over the last two years. A broad research program was
set in place in collaboration with a FinTech Australia ► Short interviews at Melbourne and Sydney hubs In particular, three EY reports have been referenced in
this Census report and the microsite:
steering committee. The research was conducted ► Conducted with fintech leaders
between August and September, 2017. ► The Fintech Adoption Index 2017
► Interview quotes are on the EY FinTech Australia
Census 2017 microsite ► EY UK Fintech Census 2017
This report presents the key findings and it will act as a ► UK FinTech: On The Cutting Edge – An Evaluation of
powerful platform for FinTech Australia when engaging the International Fintech sector 2016
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. The research program was designed and run by EY’s
dedicated market research practice, EY Sweeney

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The Australian
fintech landscape

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Fast facts: Sector profile 2017
Business based Biggest competitors (excl. none) Number of employees (median)

Overseas
2%

NT
0% QLD
12% 36% 29% 27% 7% 5 2
WA Incumbents Other fintechs Overseas Other
9% SA in Australia fintechs with Full-time Part-time
4% with a similar a similar
NSW offering offering
54%
VIC
19% Type of fintech (multiple response) End customers (multiple response – excl. don’t know)

TAS Wealth and investment 30%
1% Retail consumers 45%
Lending 23%
Net B2C
Age of company (excl. didn’t answer) Data analytics / Big Data 18% 55%
Sophisticated
2016 2017 22%
Payments, wallets and supply chain 16% investors
21% Asset management and trading 11%
36%
1 year or less SME and/or other
Regtech 10% 35%
startups
2 to 3 years 48% Net 2 yrs
44% or more Business tools 10%
> 3 years
31%
79% Marketplace-style / peer-to-peer solution 10% Corporate 33%
20% Net B2B
Identity, security and privacy 6%
71%
Blockchain/distributed ledger solution 5% Banks and other
Company stage FSIs 43%
2016 2017 Insurance/insurtech 5%
Accelerator/venture capital 5%
29% Government 14%
43% Crowdfunding/fractionalised investing 5%
Pre-revenue
Challenger/neo bank 4%
Post-revenue
71% Other 15%
57% Digital/Crypto currencies and exchanges 4%
Other 9%

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The Australian fintech landscape
The Australian fintech industry has matured over the Perhaps the most important determinant of this
past twelve months. It has evolved from being quite a bourgeoning maturity for B2C firms is the level of
fragmented tech sector fuelled by the belief and passion receptiveness of the Australia public. In EY’s recently
of the founding firms to one that has much greater released Fintech Adoption Index conducted across
definition and structure. It is an industry in Australia twenty markets we saw…
that has meaningful scale and an ecosystem that
► The global average for fintech adoption was 33%
delivers effective support to help breed success. It is
still early days, but the transition in a short period of ► Australia ranked 5th with a 37% adoption rating.
time has been pronounced. While in the shadows of the quite different markets
of China (69%) and India (52%), Australia is on par
It’s estimated that the number of fintechs operating in with other developed economies with similar
Australia is now approaching 600, having more than financial systems (e.g. US and UK).
doubled since 2015. This growth in the number of firms
is an important metric when assessing the strength of ► This level of adoption shows that fintech is now at a
the industry, it can be read alongside a number of other tipping point where it is poised for mainstream
industry characteristics that further underline the adoption.
contention that this is a more mature tech sector.
The prevailing outlook of many of the fintech industry
► A greater proportion of fintechs have been in leaders is optimistic, if not bullish about what the future
business for more than three years and that points holds. While the risk is still high and hard graft is the
to stability and resilience. norm, there is recognition that there is greater support
► The proportion of Australian fintechs that are now in and that the barriers to success while still pronounced In 2016, FinTech Australia had identified
the post revenue stage has also increased indicating are less than they were. some 250 fintech companies in Australia.
that the products/service offerings are in demand We now estimate there's close to 600.
and filling gaps in the market. From Hobart to Townsville, Perth to Gold
► What falls under the ‘fintech’ banner is now much Coast - great fintech companies are
broader (think RegTech, cyber/digital security, Data emerging everywhere.”
Analytics etc.) and firms that would see themselves
as ‘fintech’ are stretching far and wide into other
tech industries (e.g. Agtech, etc.) Danielle Szetho, CEO
FinTech Australia

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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.

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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 5 drivers of fintech success
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 1 Talent
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
2 Capital
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.
3 Demand

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
4 Policy

ecosystem that will help the Australian fintech industry
flourish.

For each driver of success there are a number of variables 5 Environment
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.

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1 Talent

The 2017 Census has again underlined that the ‘people’
side of Australian fintechs remains challenging. In most
► Specific profiles more challenging… Of those
fintechs that struggle to attract qualified or suitable 23% 83%
cases they are lean businesses (a median of 8 talent, the majority struggle with finding Nominate ‘Insufficient time of fintechs have all
to devote to the business’ male founders
employees) operating in a highly dynamic environment engineering/software expertise (61%), followed by
as an internal challenge
and that can place significant pressure on the leadership sales (41%) and web development (33%). This year
of the firms. We saw that 23% nominated ‘insufficient fintechs are finding it less challenging to attract
time available to devote to the business’ as an internal design/user experience talent (42% down to 24%).
challenge; this challenge is heightened among smaller However, as the industry has matured, talent pool
“Founders put a great deal of effort into researching and
fintechs in part because they may have other forms of shortages are marginally more evident for sales
thinking about what they want in a new hire so they can
employment outside of the start-up. professionals (35% up to 41%) and marketing
find the right people. They also have to be flexible with
professionals (24% up to 29%).
The commitment required by founders is immense and employment arrangements - part-time, internship, etc. -
the personal risk real, but optimism invariably abounds. ► Diversity a challenge… The profile of fintechs to make it less challenging to find the right people. After
The profile of fintech leaders shows… operating in Australia shows a marked gender 4 years and a few mistakes, I now know who I am looking
imbalance, with 76% of employees being male. for to join our business, and have confidence they will be
► 83% of fintechs are founded exclusively by males*. Overall female participation in the fintech workforce successful.”
► They are highly educated (32% undergraduate; 54% has largely remained unchanged from last year (22%
postgraduate). last year and 24% this year). FinTech Australia is
Aris Allegros , Founder
actively working to address this skew and determine Moula
► Those that are founders/CEOs of fintechs have what can realistically be done to address it in the
started on average 2.1 fintech businesses. short and longer term. To improve participation of
women in the Australian fintech industry, the top
An area of great reflection for the management of three methods suggested by survey respondents are Talent pool shortage (top 3)
fintech firms is the calibre of their staff and the ability to encouragement to follow STEM career paths (14%);
both attract and retain good people. A number of adjusting recruiting practices (14%); and change 1
Engineering/software 61%
observations can be made about the battle for talent… company culture/policies (13%).
► Limited pool in Australia… Half of fintech (52%) ► Referral the lynchpin… While emerging government 2
Sales 41%
leaders agree that there is a lack of experienced initiatives such as the STEM pathway and
start-up and fintech talent in Australia. Attracting entrepreneur visas are likely to assist in the future, Web development
3 33%
suitable or qualified talent is one of the top internal talent is mainly recruited through contacts formed by
challenges that they face. fintech co-founders, however as fintechs mature
reliance on recruitment agencies increases. Base: Have faced challenges attracting suitable talent (n=76)

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Fintech leader profile 2017
Gender Founder Current role

Average 1
CEO 55%
83% of Yes
fintechs have 40 founder
all male yrs age at
inception
57% Head of 2a
functional area
16%
founders

3
CTO
7%

4
Support role 2%
Highest level of education (fintech founders/CEOs) Number of start-ups founded/started by
fintech founders/CEOs
5
Other 5%

54% 32%
Post graduate Undergraduate
average

10% 4% 2.1
High school Vocational
certificate
40%
36%

Work status

96% 2% 20%

Work full-time Work part-time

2% 1% 5%
Work on
casual basis
Studying
part-time 0 1 2 3+
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2 Capital

Capital is the lifeblood of start-up fintechs and a raised $5.2m of capital to date in comparison
fundamental key to success is the ability to raise funds younger fintechs aged one year or less have raised “…the lack of cash flow gave us an opportunity to learn
and then manage burn rate each month. A number of on average $2.1m of capital to date. how to prioritise business resource and stay creative to
points can be made about both the access to capital and make the most use of the limited cash flow; we have
► Private funding dominates… As was seen in 2016,
the management of expenditure of the funds. been constantly thinking about how to educate and
most fintechs in Australia have received some
accelerate our partners to set up quickly and acquire
► Shallow but growing pool in Australia... The funding private funding (72%). Six in ten (57%) accessed
customers.”
of start-ups is a challenging and complex issue as some commercial funding and on average have
they need phases of capital stretching over many raised $4.2m in capital; this is greater than the
years. Venture capitalists want early stage uncapped average amount of $2.2m raised by fintechs that Joel Ramirez, Co-founder & General Manager,
Financials for Office 365
upside and various profiles of yield. Feedback from exclusively accessed private funding.
the in-depth interviews with fintech leaders suggests
► Realising profit… One in seven fintechs stated that
that the capital situation has been improving with
they are currently profitable. Of those that have not
more inflows of venture capital coming from within
started to realise profit, their current burn rate is on
and outside Australia.
average $115k a month. This is an increase in what
► Mixed capital raising success… Although was seen last year where the burn rate was $84k
successfully funded fintechs outnumber those that month.
fail to raise capital or couldn’t raise what they
► Managing burn rate… Average burn rates are
desired, this doesn’t account for organisations that
particularly high among fintechs that have received
may not be in existence anymore. Views in this
Census were primarily collected from fintechs that
funding and scaling up their business, with the
increased burn rate reflecting the maturing of
14% 39%
remain in existence so there is a skew to fintechs of fintechs are currently Had their expectations of
Australian fintechs. While nearly 30% of fintechs profitable capital raising experience met
that were successful in their capital raising. Fintechs
have a monthly burn rate in excess of $100k, the
that have accessed commercial funding are more
majority of these businesses are skewed towards
likely to have raised the amount of capital required.
having raised in excess of $10m in capital to date
► Solid averages… Of those fintechs that indicated (i.e. larger, more funded fintechs). For this segment,
they have successfully raised capital to date, on
average each has raised $4.1m. This is an increase
the remaining runway is typically more than a year,
but there is still a sizeable proportion (37%) that only 72% 57%
on what was seen in 2016 ($3.9m raised) and is have up to a year before the cash reserves dry up. Private Commercial
funding funding
indicative of a maturing industry. Fintechs in
existence for more than three years have on average

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3 Demand

At the heart of any start-up or new venture is the ability ► Cost of customer acquisition and retention… While
to identify a gap in the market - a latent need that can be EY’s research shows the rapidly growing usage of “There are those who believe that fintechs struggle to
met by delivering a compelling offering. However the fintechs, one of the core external challenges for translate the innovation and great customer experience
gaps aren’t always obvious and the solution needs to be organisations operating in Australia is the ‘cost of that they create into real customer adoption. The EY
seen as genuine and positively differentiated in the customer acquisition’. This was cited as a challenge FinTech Adoption Index suggests that thinking is now
market. by one in two fintechs surveyed. outdated. Fintechs are not only becoming significant
players in the financial services industry, but are also
The key insights from the Census and some broader In terms of demand profile, Australia is ranked fifth out shaping its future.”
global research conducted by EY are… of 20 markets around the globe; with some of the key
► Fintech Adoption continues to grow… EY recently observations being… Imran Gulamhuseinwala,
EY Global FinTech Leader
conducted a large scale consumer study across 20 ► Tech-savvy younger generations are high adopters of
countries exploring the level of fintech adoption. fintech, particularly of money transfer and payments
China dominates the global landscape, with adoption services, however older generations also
still comparatively high in Australia (37%) and it has demonstrate high acceptance of such services.
tripled over the past two years (13% adoption in “Congratulations to the small businesses of Australia. Pin
Australia in 2015). ► Australia is the fourth most developed money Payments has received enthusiastic support for our
transfers and payments market, and the sixth most payment solutions, even whilst being a relatively new
► A more diverse profile… The fintech industry in developed insurance Fintech market. brand to the space. Our customers recognise how we're
Australia is maturing and broadening. There is now trying to help their day-to-day, and in return are patient
greater collaboration into other sectors (e.g. Agtech) ► Overall Fintech adoption in Australia is expected to
and generous with their feedback. So from our
and an improving working relationship with the increase in the next 12 months from 37% to 43%.
perspective, Australia is a great market to launch a
incumbent/traditional players in the financial ► While adoption will continue to increase amongst fintech business in.”
services industry. young adults, usage is expected to increase amongst
► Solution-centric… The majority of fintechs believe older generations who are warming to idea of
Chris Dahl, Director,
that the key reason that consumers or businesses conducting financial transactions digitally.
Sales & Growth at Pin Payments
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.

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The EY global fintech adoption index
FinTech adoption rates across our 20 markets Comparison of FinTech adoption in six markets between 2015 and 2017
Australia’s fintech adoption rate is ranked 5th, with a 37% adoption rating Australia has one of the fastest growing fintech markets

42
37
32 33
29
23
18 17
13 15 14
8

37% Australia Canada Hong Kong Singapore UK US

2015 adoption 2017 adoption

Notes: The figures show adoption rates per market for the six markets for which a comparison is available.
All figures are shown in percentages.

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.”

Meredith Angwin, Partner
*Belgium and Luxembourg Financial Services, Ernst & Young Services Pty Ltd, Australia
**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. Source: EY Fintech Adoption Index
http://www.ey.com/gl/en/industries/financial-services/ey-fintech-adoption-index

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4 Policy “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
Policy, regulation and broader government support are 85% of fintechs said that ‘Government mandated open able to help. There is a growing community which
fundamental dimensions in creating a healthy and data protocols’ would be an ‘effective’ initiative to grow requires a lot more conversation around what data is
sustainable fintech ecosystem. There is a need for policy and promote the industry up from 76% last year. available and suitable, as well as a lot more collaboration
momentum to be maintained and for there to be a to make sure that the solution most beneficial to
proactive fintech agenda at all levels of government. We New payments platform… Most fintechs (82%) believe consumers can be found.”
that providing more transparent access points for
explored a wide range of potential growth initiatives and
those considered most effective in the eyes of Australian fintechs to connect to the New Payments Platform is one
of the top effective industry growth initiatives; this Ranin Mendis, Founder & CEO
fintech start-ups are listed below. Loan Dolphin
reveals that fintechs are unconvinced about the ease of
access to this infrastructure.
Tax tops the list
Nine in ten (87%) participants agree that the top Licensing / sandboxes “One of our biggest challenges today is to effectively
effective growth initiative is to ‘make the research and engage and collaborate with the Government to
development tax incentive more accessible to start-ups’, As fintech start-ups move forward with their technology
springboard Australian innovation. We do believe
solution, ASIC licences are an important part of a go to
followed closely by providing ‘Capital gains tax relief for partnering with the government is necessary but finding
tech start-ups first incorporated in Australia’ (85% market strategy.
the best approach for proof of concepts is still a work in
effective). Founders interviewed are quite positive about Licence uptake… Six in ten (62%) fintechs surveyed do progress.”
the level of tax incentive support provided in the past 12 not currently have one of the three key ASIC licences
months and would like this to increase. (financial services licence, credit license or market Joanne Cooper, Founder & MD
infrastructure licence). ID Exchange
Access to open bank data
Regulatory sandboxes… Over the last 12 months, ASIC
With open banking being under independent review in expressed a desire to strike an appropriate balance Licenses
September 2017, the anticipation of positive between encouraging innovation whilst providing an
recommendations for the setup of an open banking appropriate regulatory framework for the Australian ASIC financial 32%
services license 16%
regime in Australia is palpable. fintech industry. At the end of 2016, ASIC launched the
regulatory sandbox framework which provides fintechs 11%
Customer acquisition… There is strong recognition that ASIC Credit License
with limited freedom to operate within set guidelines 6%
without open bank data, fintech start-ups will continue to
while their product solution is in development. The ASIC Market 1%
face much greater customer acquisition costs. Access to infrastructure license 2%
Census data indicates that only 1% of Australian fintechs
consumer data protected within this system would
currently use an ASIC regulatory sandbox, however, a 1% Currently have
enable them to more easily identify attractive customer Banking license
further 9% intend to use this in the next 12 months. 2% Looking to aquire
segments and the likely demand for particular products.
6 EY: UK FinTech – On The Cutting Edge – February 2016 EY FinTech Australia Census 2017 | 19
Introduction About the research The Australian fintech landscape Drivers
Drivers of success
success Future focus Contact us

Potential growth initiatives
Net Net
Very effective Fairly effective Not very effective Not at all effective effective effective
2017 2016
Make the research and development tax 60% 27% 11% 2% 87% -
incentive more accessible to start-ups

Government mandated open data protocols 51% 34% 11% 4% 85% 76%

Capital gains tax relief for tech start-ups first
incorporated in Australia
55% 30% 10% 5% 85% 87% 85%
Government mandated
Reduced taxes, such as payroll taxes, which open data protocols is
57% 26% 11% 6% 83% -
apply when hiring employees an effective initiative
to grow and promote
More transparent access points for fintechs to the industry
42% 40% 14% 4% 82% -
connect to the New Payments Platform
Removing barriers to the creation of new
40% 40% 16% 3% 81% -
banking licences
An expanded and more flexible regulatory
36% 42% 14% 8% 78% -
sandbox environment
A cross-industry solution to share know-your-
43% 32% 19% 7% 75% -
customer and identity validation information
Easier access to skilled migration visas to be “We have a policy directive from the Federal Government
34% 34% 23% 10% 67% -
able to hire new employees that innovation and fintech is important, however there is
Programs and grant assistance to access the a large gap to how this is supported by the R&D tax
existing Government Launchpads in Tel Aviv, 25% 39% 23% 12% 64% 64%
Shanghai, Berlin, Singapore and San Francisco incentive; clearly the current program needs a shakeup to
Opportunities to pitch for Government tenders
make it effective for start-ups.”
27% 31% 30% 13% 58% 61%
and projects
Creation of more referral agreements between Stuart Stoyan, Deputy Chair and FinTech
21% 36% 32% 11% 57% 66%
ASIC and Regulators in other markets Census Founder
Creation of more Government Launchpads in FinTech Australia
15% 39% 32% 14% 54% 56%
other overseas markets
A government-supported digital sovereign
16% 24% 38% 22% 40% -
currency (i.e. a Digital Australian Dollar)

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?

EY
EY FinTech
FinTechAustralia
AustraliaCensus
Census 2017
2017 | 20
Introduction About the research The Australian fintech landscape Drivers
Drivers of success
success Future focus Contact us

Accelerators and incubators are an important
contribution to the success of the fintech industry

5 Environment

60% 25% 15%
Most of the fintech start-ups are lean operations, having ► Lower cap firms more reliant… Typical usage of co- agree Neither/nor disagree
relatively small numbers of staff, but a big vision. The working spaces is more limited among fintechs that
research has underlined the importance of strong have raised in excess of $5m of capital to date or are
support networks beyond the founder, the board (if greater than five years old. These businesses have “Moving into a fintech focused hub has been of massive
there is one) and investors. The ability to effectively evolved toward renting their own office space and help. We are supported by simply being in such an
leverage peer and industry support is imperative. have surpassed their initial requirements for co- environment and surrounded by like-minded and
working spaces. intelligent people who are building their own businesses.”
In the Census, the use of accelerators/incubators and
co-working spaces was explored with Australian fintechs. ► High usage amongst the converted… Hubs are
A number of points can be made about their usage and accessed on average over two times a week, with Matt Jones, Co-founder
three in ten fintechs accessing these between five Mosaic Money
impact.
and seven times a week. Frequency of usage of co-
► The power of hubs… Accelerators and incubators are working spaces is higher among fintechs based in
considered an important contributor to the success NSW which reflects that NSW is the key financial “The fintech industry in Australia has moved through the
of the fintech industry in Australia by 60% of Census market in Australia, housing the greatest number of initial phase of exuberance and is now settling into a new
participants. In comparison, last year the importance fintech hubs/co-working spaces. stage of maturity which will see consolidation of more
was higher (69%) indicating that whilst hubs are commercial ideas & focus on consumer & small business
critical for support, the industry is coming out of the ► Government support is growing… In the past 12 problems that need to be solved at scale.”
nursery stage. Those in hubs experience the benefits months there has been significant activity by State
almost daily with planned and unplanned governments to create new and expanded hubs
which will accommodate fintech start-ups. This is Aris Allegros, Founder & CEO
conversations helping them take constructive steps
demonstrated by the Sydney Start-up Hub which Moula
in the right direction.
when open in late 2017 will accommodate some
► Mixed usage of co-working space… Users of hubs 2,500 people across a range of incubators and
describe the workplaces as a source of ideas, accelerators over 11 floors. In Victoria, the State “If we had done this independently without being part of
experience, insights, expertise, accommodation and Government released a tender in June 2017 for a the ecosystem and community such as Stone and
support. However, they haven't cut through to all. fintech operator to launch a dedicated fintech hub / Chalk and H2, we would not have achieved what we have
Just over half of fintech start-ups surveyed (55%) accelerator in the Docklands digital precinct. during the last two years. As a result, we were introduced
have ‘never used a shared workspace’. Some of to second-tier banks who joined our platform which we
those that embarked on their start-up journey would otherwise not have been able to expand to.”
without the support of a hub, lamented not having
found one from which to launch their venture. Ranin Mendis, Founder & CEO
Loan Dolphin

EY FinTech Australia Census 2017 | 21
Introduction About the research The Australian fintech landscape Drivers of success Future focus
Future focus Contact us

Future focus

EY FinTech Australia Census 2017 | 22
Introduction About the research The Australian fintech landscape Drivers of success Future focus
Future focus Contact us
Annual revenue growth %
Revenue in June 2017 compared to June 2016

Revenue decline 6%

Outlook and optimism Nil growth 10%

1% to 100% 20%

The challenges confronting any start-up in any industry agreed that Australian fintech organisations will be 101% to 300% 24%
are recognised as being profound – and it was a able to ‘win’ against international peers.
sentiment that echoed through our interviews with 301% to 700% 14%
► Local competition… There are mixed views on the
fintech industry leaders. They spoke of the wide range
perceived quality of domestically based >700% 24%
of potential challenges that can emerge on the journey
organisations (34% ‘agreed’ that there is a lack of
to having true market impact and that they can’t all be Base: Companies in post-revenue stage excluding ‘prefer not to say’
quality fintechs in Australia; while 38% disagreed).
overcome by the passion and focus of the team. (n=49)
However, what has emerged in the study is that there is
There is a positive outlook in the industry, founded on a
deep self-belief and a bullish outlook prevailing in the
belief that there is a competitive advantage for Median post revenue growth
industry.
Australia fintechs. The three key elements of this
Among post revenue fintechs, year on year revenue potential competitive advantage are considered to be…

208%
growth is substantial. Fintechs indicated median growth ► Regulatory environment… Australia’s sophisticated
of 208% on their revenue in June 2016, driven by and trusted regulation of financial services provides
a cohort of 24% of fintechs that have experienced a solid foundation for the development of solutions. June 2017 vs.
growth in excess of 700%. Higher growth rates are also June 2016
experienced by fintechs under three years in existence, ► Advanced financial services industry… Australia’s
starting from their lower bases. Revenue growth advanced financial services and wealth management
stabilises somewhat once fintechs generate in excess of sector delivers both commercial experience and
$100k revenue a month (127% growth rate on June creates opportunities.
2016).
► Access to Asia… Australia is a good starting point to
“The disruption of financial services is most likely to come
develop their export solutions – particularly in the
The assured outlook is further emphasised when we from digital giants from developing markets such as China
Asia Pacific region and proximity to capital sources
look at perceptions around the relative competitiveness or even those technology giants from the US who are
from major Asian centres such as China.
of fintechs in Australia… extending their platform dominance into financial
services. In the face of this, many local fintech start-ups
► Internationally competitive… Two thirds (63%) of are likely to be acquired by either global players or local
fintechs agreed that Australian fintechs will be able incumbents and should be preparing for that possibility by
to compete internationally. Forty-five percent keeping in close contact with potential acquirers.”

Simon Cant, Chair
FinTech Australia

EY FinTech Australia Census 2017 | 23
Introduction About the research The Australian fintech landscape Drivers of success Future focus
Future focus Contact us

Future outlook
Expand/expand
2016 2017
further overseas 38% 54%
Global reach
Each major fintech centre around the world has its own the next 12 months; this has increased from 38% to 54%
unique dynamics – creating both opportunities and of fintechs this year. Among the fintechs that are “Start-ups know that expanding beyond Australia’s
borders will lead to a significant increase in customers
boundaries for those domiciled in each location. These looking to expand, the top three markets for expansion
and investors, which is why they believe they need to
are defined and influenced by a wide range of factors are the United Kingdom (49%), Singapore (40%) and the
solve problems for people globally. It takes a creative
that predominately revolve around the five ecosystem United States (38%).
idea and solution, but it also requires effective strategic
pillars. Some fintechs operate within these parameters,
execution of the idea, along with a global network and
seeing themselves as more domestic or regionally From the Australian fintechs who have already ventured
community to help tap into local regulatory knowledge.”
oriented solutions, others have international aspirations beyond our shores, their advice is consistent;
(if not current presence).
Danielle Szetho , CEO
Don’t go it alone, you need to form trusted
FinTech Australia
The Australian landscape is acknowledged as unique, as partnerships in your target markets and
many of the fintechs operating here need to do so within
work with those who understand the
a heavily regulated environment. They also have the “Incumbent institutions struggle to imagine the rules are
challenges relating to talent, capital, demand, policy and cultural and consumer norms.”
changing and their old business models are not
environment. sustainable. To keep up with the shift, they need to quickly
Don’t underestimate the licencing find new value chains that are inclusive of the customer.
These ‘constraints’ are real and need to be recognised, challenges in each and every market; be This will be vital to their political and financial future.”
but it was also interesting that several leading industry
prepared for this to take considerable
commentators felt the Australian fintechs could be more
time, patience and resources.” Katryna Dow, Founder & CEO
globally ambitious. This was not intended as a criticism Meeco
per se, more a recognition of the calibre of the
proposition and the potential to cross borders. It was felt Among fintechs that are not considering
that other international hubs, like the UK, are perhaps expanding/expanding further overseas reasons include “I am delighted to see the increase in Australian fintech
more geared to driving globally-scaled disruptive business plan is currently focusing on the local market firms that are setting global goals for their businesses.
innovation. It’s a point that will no doubt provoke growth (67%), followed by lack of time to investigate More than half are now focused on expanding overseas
considerable discussion and debate and that is, in itself, potential overseas markets (22%). in the next year. Supporting these creative start-ups is a
important for the industry. major focus of Austrade, especially through our ‘Landing
Pads’ program in five global innovation hubs, which is
Regardless of the perception and the belief that some already propelling many clever Australian businesses to
fintechs could be more globally assertive, there is new heights.”
significant pending focus across borders. More fintechs
are intending to “Expand or expand further overseas” in Stephanie Fahey, CEO
Austrade

EY FinTech Australia Census 2017 | 24
Introduction About the research The Australian fintech landscape Drivers of success Future focus
Future focus Contact us

An effective ecosystem
In the fintech sector in Australia, optimism abounds,
however there is an undercurrent of realism in the “Australia’s 600-odd fintechs now employ over 5,000
community and amongst astute observers that tempers people, are growing at over 200% per annum and are
the enthusiasm. There is recognition that while raising serious amounts of capital. Combined with the
Australian start-ups are progressive and agile, to truly strong support from Federal and State governments
succeed they will require significantly more support. and corporate partners, we have now reached a
While there are many strengths, Australia doesn't have tipping point where there is enough maturity in
the financial services scale, capital for investment or Australian fintech to enable a robust eco-system.
tech industry presence of some global peers. In that We’re not there yet, but the foundation is built for
context, the need to create the most effective Australia to take a leading regional role in fintech.”
ecosystem to foster and support growth is all the more
important.
Stuart Stoyan, Deputy Chair
and FinTech Census Founder
As outlined in this report and supported by broader
FinTech Australia
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.

EY FinTech Australia Census 2017 | 25
Introduction About the research The Australian fintech landscape Drivers of success Future focus
Future focus Contact us

Census participants*
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
CashRemit Pty Ltd Financial Mappers (Plencore Kikka Capital Optimo Financial Pty Ltd SelfWealth (IPTMA)
Wealth Ltd)
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

* Note – Fintech participants listed above specifically provided their permission to be cited in this report

EY FinTech Australia Census 2017 | 26
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EY EY Sweeney FinTech Australia stakeholders. In so doing, we play a critical role in building a
better working world for our people, for our clients and for
Rowan Macdonald Marc L’Huillier Danielle Szetho our communities.
Partner Financial Services Partner FinTech Australia CEO
EY refers to the global organisation, and may refer to one or
Ernst & Young, Australia Ernst & Young, Australia danielle@fintechaustralia.org.au
more, of the member firms of Ernst & Young Global Limited,
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Meredith Angwin Lewis Jones FinTech Australia Chair
our organisation, please visit ey.com.
Partner Financial Services Director - Melbourne simon@reinventure.com.au
Ernst & Young, Australia Ernst & Young, Australia © 2017 Ernst & Young, Australia.
All Rights Reserved.
meredith.angwin@au.ey.com lewis.jones@au.ey.com Stuart Stoyan
FinTech Australia Deputy Chair and AU00003155
FinTech Census Founder ED None.
Olivia Willee Aditi Kane
Partner Financial Services Manager stuart.stoyan@moneyplace.com.au This communication provides general information which is current at the
time of production. The information contained in this communication
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