2019 EY FinTech Australia Census - NOV19

Financial Technology and Regulatory Technology
Submission 30 - Attachment 1
Introduction About the research The Australian fintech landscape Drivers of success Future focus Contact us
EY FinTech
Australia Census
2019
Profiling and defining the
fintech sector
FinTech Australia
EY FinTech Australia Census 2019 | 1

Contents
03 Introduction
08 About the research
09 The Australian fintech

landscape
19 Drivers of success
39 Future focus
44 Contact us

Introduction
Introduction

Introduction
The Australian fintech industry has matured with increasing profitability and is
globally connected
Key business challenges 2019 Median revenue growth (post-revenue companies) Future outlook
Top 3 internal challenges Year on year post-revenue growth continues to Australian fintechs continue to focus on overseas
improve expansion in the next 12 months
45% 44% 41% Revenue decline
Nil growth
11%
Either expand or expand further overseas
Product Product and Attracting suitable 0%
development market fit or qualified talent 1% to 100% 51%
101% to 300% 2016 2017 2018 2019

14%
Age of company (excl. didn’t answer)
301% to 700% 14%
38% 54% 54% 51%
2016 2017 2018 2019 >700% 11%
21% 21% 15%

36%
1 year or less
42% Median post-revenue Top 8 markets for potential expansion (excl. don’t know)
36% Post revenue fintechs
2 to 3 years 48% growth
44% 85%
77% 80%
68% in In the past 44%
> 3 years United Kingdom
43% 44% 2018 12 months 52%
31%
20%
42%
United States
38%
38%
Female participation in the fintech workforce Profitable fintechs (post-revenue) New Zealand
27%
% of female employees A greater proportion of fintechs are profitable
31%
this year Singapore
2019 30%
32%
24%
2018 23% Canada
28% 13%
24% 19%
22% 2016 2017 20%
Hong Kong 30%
14% 14%
13%
Japan n/a
2019
9%
Malaysia n/a 2018
2016 2017 2018 2019

Introduction
Fast facts: The fintech landscape in Australia 2019
Sector profile Industry gender profile Capital (multiple response – excl. don’t know) Government support and the
regulatory environment
Business base Gender (workforce participation)
NSW 52% 73% 66%
VIC 27%
68% 32% of fintechs have
75%
85% agree implementation of Open
Banking would be effective
male female all male founders
QLD 11% 26%
Private 34% 40% Commercial
Other 11% funding funding
agree accelerators/incubators are
66% important contributors to the
Company age (excl. didn’t answer) Fintech leader profile (founders/CEOs) success of the fintech industry
1 year or less 15% Average scale of last capital fundraising $2.23m
2 to 3 years Education: Average no. of
42% mention government incentives
>3 years 44% 47% post grad
startups founded:
Average capital raised to date $4.12m 25% and tax regulations as a challenge
facing the industry
38% under grad 1.9
No. of employees (median)
Full time 7
Monthly burn rate Outlook: Next 12 months expectations
Part time 2
Talent
Top 3 talent shortages:
Average monthly 81% 64% 51%
burn rate (excl. $113k Grow Grow employee Expand or further
profitable fintechs) revenue number expand overseas
Type of fintech (top 3) Engineering/software 69%
30% 18% 18% Sales 41%

Wealth and Lending Data,
Marketing 33% Paying customers Company 77% 23%
Investment analytics/Big
Data stage: Post- Pre
revenue revenue
No. paying
Agree that attracting customers 27% 24% 22% 27%
End customer profile 41% qualified or suitable talent is
an internal challenge
(post-revenue)
1 to 10 11 to 50 51 to 500 >500
Globally competitive
55% Only
B2C
23%
Retail consumers 44% 63%
Sophisticated investors 23% agree Australian fintech
Both Relationship with incumbents Median fintech post-revenue growth companies will be able to compete
32% internationally
Banks and other FSI’s 41%
Only SME and other startups 38% nominate 'building
80% 48%
B2B
41% Corporate 43% 42% partnerships with banks and
other financial institutions' as In the past 12 months
agree Australian fintechs will be
able to win against international
73% Government 15% a key external challenge fintechs

Introduction
FinTech Australia
Welcome to the EY FinTech Australia Census 2019. FinTech The fintech sector continues to grow rapidly in Australia
Australia has continued its successful collaboration with and around the world. EY is committed to working with
Ernst & Young Australia to deliver this important piece of fintechs, investors, regulators, governments, education
research for the fourth year running. The Census remains institutions and accelerators/hubs to help the industry
the only detailed, industry-backed analysis of the Australian realise its potential. An important part of our
fintech industry. commitment has been to deliver comprehensive,
focussed and prescient thought leadership to help define
This research initiative forms a critical part of FinTech the industry, identify the challenges and cast light on the
Australia’s efforts to foster a thriving fintech ecosystem. best way forward.
Australia’s fintech industry has emerged as being amongst
the important fintech ecosystems globally. This year we For the fourth year, the EY FinTech Australia Census
have seen an increase in the level of partnerships between provides an exciting contribution to this commitment and
incumbents and fintechs as the approach to collaboration recognises the strong global connection within EY
matures and as consumer and business demand grows. supporting the fintech industry. The Census is essential
research conducted with the Australian fintech
The Census gives us hard data and credible insights to back community by EY Sweeney. It delivers a powerful fact
our advocacy work to drive the industry’s ongoing base, combined with broader insight to inform and inspire
expansion. This year’s Census delivers new insights into key those involved with the sector. For this first time we have
industry issues, notably the impact of last year’s Royal added views from major Australian financial services
Commission and the implementation of Open Banking under organisations on collaboration with fintechs and how this
the Consumer Data Right (CDR) legislation. It also addresses has developed in Australia.
the progress in creating a diverse and inclusive industry,
international expansion intentions and key barriers to We are proud to be collaborating with FinTech Australia
growth. on this significant initiative and pleased to be able to
share the Census’ findings.
This report is also, arguably, the best source document to
define the overall shape of Australia’s fintech industry and Meredith Angwin
how we differ from overseas markets. It gives us fine-grain Partner, Financial Services,
detail about the established and emerging sub-sectors within Ernst & Young Australia
fintech and helps track the industry’s increasing maturity in
terms of company size and revenue.
We hope you enjoy reading the Census report and learning

about the dynamic fintech industry we have here in
Australia.
Rebecca Schot-Guppy
General Manager, FinTech Australia
Introduction
Executive summary
The Australian fintech industry has matured, reflected (43% v. 50% last year). Another positive shift this the R&D tax incentive. The CDR is seen as an
in the profile of the firms, the breadth of coverage, the year is a greater degree of gender diversity. Talent effective growth initiative by 85% of fintechs
level of global connection and increased levels of will always be in the spotlight as a barrier to growth, interviewed. Further, 40% anticipate becoming an
profitability. Confidence in the industry is high, so it continues as an area in which fintechs believe accredited CDR provider, of which 60% would
underpinned by some flagship success stories over the more support is required. connect to CDR alongside other means of accessing
past 12 months. It has been a year in which the consumers’ financial information. The R&D tax
financial services industry has been in the spotlight with  Capital… The story in 2019 is markedly different to incentive evokes mixed reactions. Well over half
the Hayne Royal Commission, the debate around the 2018. This year the big theme is of a tightening of (58%) of the fintechs interviewed had successfully
Consumer Data Right legislation, the tempering of the access to capital, reflected in slightly less success in applied for the incentive, with 76% saying that
R&D tax, challenges around skilled migration visas and capital raising and lower levels of funds raised. access to the scheme encourages them to keep
a softening of access to capital. There is also a skew to the more established and aspects of their business on-shore. The prevailing
larger players in the fintech space. Two of the big concern is around the lack of clarity and certainty,
A key theme in the industry as we head into 2020 is the shifts this year are in the percentage of fintechs along with reduction in the scheme.
degree of collaboration between fintechs and the that are post-revenue (77%, up 9 points from 2018)
incumbent major players. It is fair to say that, while still with close to one in four fintechs being profitable;  Environment… The environment supporting fintech
highly competitive, there is a much more mature, and tighter management of cash reserves reflected startups and scale-ups continues to evolve with
streamlined and respectful relationship emerging. in a reduced burn rate. fintech hubs well established in all east coast capital
cities and recent announcements of expansion west
 Demand… The sector continues to grow and evolve cross the continent this year. Founders continue to
As in previous years, we have explored in detail the
at pace, with the major fintechs in Australia no draw on support networks provided through hubs,
dynamics around the five pillars that underpin the
longer on the fringe, but offering sophisticated and peer networks and also government initiatives and
success of the industry. While some aspects have
credible options for consumers. Usage of fintechs cite that this is vital for success for the fintech
remained consistent, equally there have been some
by Australians continues to rise, with the Global industry as well as the individuals.
significant shifts over the past 12 months.
Fintech Adoption Index showing an Australian
 Talent… The attraction and retention of talent is a adoption rate of 58% (up 21 percentage points since The Australian fintech industry has matured and
consistent and longstanding issue for Australian 2017). continued to grow. There remains a high degree of
fintech organisations. It remains a top tier optimism, however the industry is facing some different
 Policy… It has been a milestone year in the area of
challenge, but there has been a shift this year – challenges than we have noted in prior years. Two
policy, regulation and government support. The two
fewer fintech leaders believe there is a lack of fundamental foundations for continued success will
most prominent areas of focus have been Consumer
experienced startup and fintech talent in Australia include the level of effective collaboration with major
Data Right legislation (CDR or Open Banking) and
players and the level of government support.

Introduction About the research

research The Australian fintech landscape Drivers of success Future focus Contact us
About the research
Background
Methodology
FinTech Australia was founded in March 2016 and is
the peak body for fintech organisations in Australia.
FinTech Australia is a member-driven organisation
that is building an ecosystem of Australian fintechs to
advance the global economy and culture.
FinTech Australia’s mission is: “We are here to build a

1 Quantitative research
2 Qualitative Research
3 Desk research
strong community, foster connections while ► 120 online surveys of 18 ► 8 Interviews with fintech Alongside the qualitative and
supporting innovation and regulation that our minutes leaders and stakeholders at quantitative research, the EY
members require. Above all else, we are here to be the Melbourne and Sydney Global Fintech Adoption Index
► Conducted with people
hubs has been referenced. A copy of
voice of the Australian fintech community.” currently working in the
the full report can be found
fintech industry ► 6 interviews on
here.
To support this charter, FinTech Australia and EY collaboration case studies
► 43% of participants were
launched the inaugural FinTech Australia Census in with leaders of
founders of fintech
2016. It is a study designed to profile and define the innovation/digital functions
companies, 58% were CEOs
within major Australian
industry. and 21% were heads of
financial service
functional areas
organisations
In 2019, we present the fourth edition of the study. ► A mix of members and non-
The research covers a wide range of areas, with the members of
coverage jointly developed by EY and FinTech FinTech Australia
Australia.
► Contact lists provided by
FinTech Australia
This report covers all of the key findings from the
research program, providing comprehensive insight
into the sector.
The research program was designed and run by EY’s
There is also a dedicated website providing further dedicated market research practice, EY Sweeney
access to the research that can be accessed here.

Introduction About the research TheAustralian

The Australian fintech landscape
landscape Drivers of success Future focus Contact us
The Australian
fintech landscape


Fast facts: Sector profile 2019

Business base Biggest competitors (excl. none) Number of employees (median)
0%
NT
11%
QLD 37% 29% 24% 10%
8%
WA
3%
Incumbents Other fintechs
in Australia
Overseas
fintechs with a
Other 7 2
SA with a similar similar Full-time Part-time
52% offering offering
NSW
0%
27% ACT
0% VIC Type of fintech (multiple response) End customers (multiple response – excl. don’t know)
Overseas 0%
TAS 2019 2018
Wealth and investment 30% 23% Retail consumers 44%

Age of company (excl. didn’t answer) Lending 18% 19% Net B2C
18% Sophisticated
55%
2016 2017 2018 2019 Data analytics/Big Data 21% 23%
investors
21% 21% 15% Payments, wallets and supply chain 17% 22%
36%
1 year or less SME and/or other
36% 42% Business tools 13% 13% 38%
2 to 3 years 48% Net 2 yrs startups
44% or more Marketplace-style or p2p solution 12% 10%
> 3 years
31%
43% 44% 85% Asset management and trading 11% 8%
20% Corporate 43%
Net B2B
Regtech 10% 9%
73%
Insurance/Insurtech 9% 11% Banks and other
Company stage FSIs 41%
2016 2017 2018 2019 Identity, security and privacy 6% 5%
29% 32% 23% Accelerator/venture capital 5% 3% Government

43% 15%
Pre-revenue Blockchain/distributed ledger 4% 7%
Post-revenue
71% 77% Challenger/neo bank 4% 5% Other
57% 68% 13%
Crowdfunding investing 4% 3%



What is Fintech?
The Australian Fintech Industry is increasingly  Formative and developing… The emerging area of Organisations combining
profitable and the year on year revenue growth trend regtech which has significant alignment with
continues. In addition, we saw Australia’s first unicorn financial services is being driven by Regulator innovative business
(US$1billion valuation) status achieved by Airwallex in interest.
March 20191 and fintechs are dominating the ‘buy now models and technology to
pay later’ sector, rather than the incumbents. In this
fourth edition of the EY Fintech Australia Census, we
 Challenger Banks arrive… with strong backing and
distinct market approaches, Australia’s challenger
enable, enhance and
see an industry that has definition, is increasingly
embraced by consumers and with stronger
banks will provide consumers and business with
competitive banking services which will expand over
disrupt financial services
collaboration between fintechs and incumbents. time.
As in previous years, our research has focused on a

Consumer uptake… From the 2019 EY Global Fintech
number of issues that are fundamental to the success EY definition of fintech
Adoption Index, released earlier this year, Australia’s
of the industry:
rate of fintech adoption is 58% in 2019 (continuously
growing from 13% in 2015 to 37% in 2017) with
Industry evolution… The Fintech Industry continues to
acceptance of fintech in Australia and demand for
grow and broaden. When the Census was first
services continuing to rise.
conducted in 2016, the industry was predominantly
characterised by bootstrapped startups that were big
on vision but had yet to connect with consumers or The promise of the Consumer Data Right (CDR)… The time is right for enhanced collaboration
impact the financial services sector. Four years later, With the first phase of Open Banking coming online in due to market conditions and increased
the profile of the industry is markedly different with a February 2020, this is high on the agenda for fintechs, competition – fintech collaboration could
spectrum of fintech maturity. the major banks and Government. This is a long- provide the ‘edge’.
anticipated change which is being greeted by fintechs
 Mature and mainstream… Greater consumer with a mix of positive outlook for the possibilities and a Simon Costello, CEO and Co-founder, Frankie Financial
adoption of frontline B2C areas (e.g., peer to peer more cautious view on the transition impacts and the
lending, personal finance) and the rise of the ‘buy rate of consumer adoption. In time, Open Banking will
now pay later’ fintechs. contribute to the re-shaping of the Australian financial
services landscape and fintechs will be an important
 Rising… Increased collaboration with incumbents 1 Source:
contributor to this change. https://www.airwallex.com/media/press/airwallex-
has seen the rise of fintechs in the financial
unicorn-series-C-DST-100m/
wellbeing and financial advice areas.


The Royal Commission Perceived impact of the Royal

Commission on the Fintech industry
The report from the Royal Commission into Misconduct Of the few fintechs that stated a negative impact on
in the Banking, Superannuation and Financial Services the Fintech industry as a result of the Royal NET Positive NET Negative
Commission, the top reasons provided are: impact impact
Industry is regarded as having had a net positive impact
on the Fintech industry by 76% of those who took part
76% 52%
► It has caused an overall negative consumer
in the research. More considered the Royal Commission
sentiment towards all organisations with a financial
to have had a positive impact (35%) rather than a
offering 35% 41% 11% 13%
negative one (11%).
► It has made the incumbents busier/more difficult to
The most prominent positive impact cited is a stronger secure time with No, it hasn't impacted our industry Negative impact
uptake of Fintech solutions in the market (49%). This is Both positive and negative impact Positive impact
followed by improvements in various aspects of the ► It has shifted focus away from innovation amongst
Base: All surveyed fintechs (120)
relationship with the incumbents such as: the incumbents
► Willingness to partner (26%)

Overall, three in five (58%) fintechs expect a long-term Positive sentiment indicated by fintechs
► A positive attitude towards fintechs (19%) positive impact from the Royal Commission. Four in five
Becoming easier to deal with (11%) (79%) fintechs who see the immediate positive impact
49% There is greater usage of Fintech
►
of the Royal Commission on the fintech industry also solutions by consumers
The language used by fintechs around the impact tend to expect a positive impact in the longer term on
of the Royal Commission is captured in the the industry.
following comments…
“More business opportunities.” 26% Financial institutions have been more
willing to partner with Fintech
“Increased demand for regtech.”

“Consumers are looking for alternatives to the
incumbents.” 19% Financial institutions have a more
positive attitude towards Fintechs
“Consumers are more aware of how bad bank
offerings are.”
“There is less trust in the large banks and corporates
and consumers will look for other alternatives.”
11% Banks and financial institutions have
become easier to deal with
“Transparency particularly in the advice business.”

Base: Felt a positive impact (62)


The Royal Commission implications  More conservative/distracted… Some fintechs do Perceptions of long-term impact
feel that dealing with incumbents for payment and
While the sentiment around the Royal Commission is banking services has become more difficult post
more positive than negative, those who are leading Royal Commission. This is put down to increased
some of the more prominent fintechs made the risk aversion of financial services incumbents.
following observations:
Fintech compliance… Increased funding of ASIC
58% 21% 9% 12%

 Strategic topic… The major financial services and other regulators has translated into greater
incumbents have had innovation focused functions scrutiny for all in the industry. It is making it more Expect a long Expect things Expect a long Don’t know
term positive to stay the term negative
for a number of years and senior executives have difficult for some fintechs to operate. While there is
outcome same outcome
been on numerous ‘pilgrimages to the Valley’ to understanding of the importance of tighter
experience the ‘cool tech stuff’. This has supported regulation to enhance confidence post Royal
the advance in innovation, however, it can be Commission, the ‘one size fits all’ approach to Base: All surveyed fintechs (120)
argued that pace is slower than needed. One compliance may stifle much needed innovation. All
positive outcome of the past 12 months is financial acknowledge that this is a fine balance and ongoing
services innovation is now a ‘standing board room dialogue between Regulators and fintechs must
agenda item’. This has the potential to accelerate continue.
collaboration.
 Open Banking/CDR… The Australian Consumer
 Tangible change… Some question whether the Data Right legislation (CDR) was the other major
The Royal Commission has exposed systemic
Royal Commission missed the opportunity to focus area in the spotlight in 2019. Overall, there is
on the real issue of the lack of competition. Within enthusiasm for CDR, with 40% of fintechs surveyed issues within the Australian financial services
this, there is a desire to see the major pieces of anticipating to become an accredited provider and industry. Fintechs are well placed to partner
legislation enacted sooner rather than later as there 60% suggesting they will connect to CDR alongside with incumbents to improve customer
is some frustration that the Financial System other means of accessing consumer data. outcomes and address some the issues
Inquiry 2016 recommendations largely remain highlight in the Hayne Report. Further, there is
unimplemented. The important changes to areas  Role of Government… A realisation post Royal
Commission is that the government with its a big opportunity for B2C fintech companies to
such as full adoption of Comprehensive Credit
legislative tools has an important role to play in provide a better experience for customer. It's an
Reporting (CCR) and Open Banking stalled for 12
months while the Commission was conducted, promoting consumer awareness of financial extremely exciting time for the fintech industry.
however it is good to see that this is regaining services innovation as a means of supporting the
fintech industry development. Alan Tsen, Chair, FinTech Australia
momentum. Also, focus was taken away from other
important areas – an example given was the Buy
Now Pay Later inquiry which progressed in parallel.


Collaboration
Change in relationship with incumbents in
the past 12 months
Better 42%
The dynamics in the fintech industry have changed Amongst the few (9) who see that their relationship
over the past four years. There has been recognition of with banks has worsened in the past 12 months, the Same 50%
the need to collaborate and to work more effectively biggest driver of this negative perception appears to be
Worse 8%
for the benefit of consumers and the financial services the Royal Commission, which has heightened
industry as a whole. Over the coming pages, we look at conservativeness and lengthened the time required for Base: All surveyed fintechs (120)
the topic of ‘collaboration’ from the perspective of both decision making and other collaboration tasks.
fintechs and the incumbent major organisations in the
industry. What we established that at an overall level, In what way has this improved? (top 5)
relationships have improved and collaboration has More access/engagement 33%
gained positive momentum.
Stronger relationships/
collaboration 29%
Collaboration: The fintech perspective Successful partnerships between fintechs and Growth of our business 16%
incumbents take time. When Ferocia started Open to new
13%
Of those who have dealt with incumbents in the past ideas/innovation
year, the vast majority of fintechs view the relationship
building Up, we knew we could trust our partner
More funding/lower rates 9%
as either unchanged (50%) or improved (42%). Fintechs Bendigo Bank to support our technology-led
are far less likely to perceive that their relationship with approach, because we'd spent many years building Base: Organisations perceiving improvement with incumbents (45)
incumbents has worsened over the past 12 months that trust working together on other projects. This
(8%). allows us to move much more quickly now. Top 5 issues with incumbents
Unwillingness to take a risk with
Amongst those who considered an improvement in the Dominic Pym, Co-founder of Up, and Ferocia
63% something new
relationship with the incumbents, a variety of reasons
are provided, most notably around: 48% Non-progressive or legacy mindsets
More access and engagement (33%)


44% Lengthy procurement processes
 Stronger relationships/collaboration (29%) Finding the right person to speak to
36% within the organisation
 Growth of our business (16%)
Unwillingness to commit financially to a
 Open to new ideas/innovation (13%) 35% partnership


Fintech Industry Voice: Relationship with incumbents
What’s improved What still needs to be addressed
 More meetings, face-time, more willingness and openness to discussion  Incumbent financial institutions have become more conservative post
and application of pilot solutions. Royal Commission, and taking longer to make decisions.
 A greater amount of trust from banks, as the industry continues to mature  Many banks are wanting to 'exit' the Payment Facilitation market due to
and grow, hence a more favourable view on the capability of emerging and their legacy systems being unable to manage risk and the increased
matured fintechs. scrutiny after the Royal Commission.
 General awareness, approval and adoption of our solution has increased  Many banks are increasing their internal IT headcount, which compels
dramatically over the past 12 months. them to give those people tasks to do despite the costs and demonstrably
poor outcomes.
 Greater acceptance of less conventional finance methods. Success
elsewhere has decreased suspicion of new approaches and technologies.  They cut funding with limited notice and minimal feedback despite our
constant communication with them.
 The banks and other financial institutions are more concerned about
disruption and becoming more willing to collaborate.  Loss of a business innovation champion who supported POC's has led to
disengagement by broader business.
Note: These are verbatim comments collected in the Census in response to questions: 'In what way has your relationship with banks and
other financial institutions improved?' and 'In what way has your relationship with banks and other financial institutions worsened?'. EY FinTech Australia Census 2019 | 15

Fintech Industry Voice: On collaboration
Fintechs say Major financial services incumbents say
Legacy mindset and technology/system Legacy mindset and technology/system
 Some have mid management that 'get' the opportunity but no executive  Fintechs perceive that these are hurdles being placed in front of them to
sponsorship to move forward. deliberately slow down adoption however it most cases this is not so. Our
(legacy) base presents real challenges and is not being used as an excuse
 We're getting more meetings, although the meetings are yet to lead to anything.
for inaction.
 The long time it takes to negotiate a facility with the bank and constant
changing requirements to access funds.
Awareness and adoption Awareness and adoption
 Access to innovation program to circumnavigate the 'old-school' slow approaches  Even if you have a good idea – the timing may not be right for us as our
has worked. internal priorities may differ.
 We have gained increased credibility due to the major contracts we have  Make sure you have a succinct elevator pitch and don’t deviate from your
signed in the past 12 months. This was difficult previously as banks were original purpose.
worried about being first movers and unable to see the right use case.
Data protection/Consumer privacy Data protection/Consumer privacy
 The international regulation scene for Privacy and Data Protection is  When you have millions of customers entrusting you with the security of
swinging in the favour of consumer controlled data models. We can their data, innovation must be tempered with a degree of caution.
demonstrate pilots on Data Portability with major global brands
 [The current financial services risk and regulatory landscape] is there for a good
participating internationally, which makes our new enabling platforms
reason; don’t underestimate the complexity and please try to walk in our shoes.
undeniable with it's advanced technological approach.
Note: These are verbatim comments in the Census in response to questions: 'In what way has your relationship with banks and
other financial institutions improved?' and 'In what way has your relationship with banks and other financial institutions worsened?'. EY FinTech Australia Census 2019 | 16

Collaboration: The incumbent perspective  Calmer seas/better foundation… In the early days Summary viewpoints taken from financial
of fintech in Australia, the environment was services incumbent interviews
Over the past 12-18 months, the distance between unsettled and more combative. There were
fintechs and the established incumbents (banks, boisterous claims about ‘disruption’ and ‘taking on
Insurers and superannuation industry) has reduced. the banks’, but that has been tempered as the Successful Australian Fintechs have
There are two examples of effective collaboration that industry has matured. addressed both sides of the market to
have resulted in market success and were showcased grow. Now they have scale their discussions with
at the recent Finnies Awards 2 :  A new mindset… Those with tenure in the incumbents are on different terms (than an
incumbents spoke about the attitudinal and emerging startup).
 Up, Australia’s first next-gen digital bank, is a behavioural shift that has occurred. ‘The eyes were
collaboration between Bendigo and Adelaide Bank opened’ of those who dismissed fintech as a fad.
(the fifth largest Australian retail bank) and Ferocia The flow-on effect is an evolution of the way banks
(an independent Australian software company). think and act around innovation and customer
needs. In practice, they are more open, there is
AgriDigital partnered with Agricultural industry Partnership requires the combination of a
 increased urgency to tackle problems, better
services providers and a Big 4 Australian Bank to great idea, technology deployment and
discipline, scaled thinking and a preparedness to
deliver a Digital Asset supply chain solution for commercial viability. All three are needed to build
accelerate (within the boundaries in which they
cotton farmers. a long term, sustainable partnership which we feel
operate).
delivers value to our customers.
 Deeper partnering/ecosystem build… There has
While there has been a lessening of the divide, the
been a shift in the relationship dynamics and the
incumbents are still acutely aware that fintechs can see
way potential is assessed, from ‘this looks
them as ‘challenging to work with and difficult to
interesting, where can we use it in the bank?’ to ‘we
navigate’. All acknowledge that they can improve
need to pick one or two strategic ones for the Fintech founders and his/her team are
however all believe that fintechs need to 'walk in our
ecosystem’ that can be integrated into the existing extremely important. We have met some
shoes' more often and to appreciate the regulatory,
technology environment and will build/enhance founders who are great leaders and very willing
data security and privacy environment they operate
customer experience. It has tilted from the number to work with us in a collaborative way.
within.
of experiments with ‘cool stuff’ to a tighter lens on
innovation that can be deployed in production. It’s
When we asked the leaders of major organisations to
driven by a tighter cost environment, skewing of
reflect on the past few years and the state of the
operational/maintenance budgets and
relationship, their views can be distilled down into three
regulatory/compliance remediation.
main themes:
2 2019 FinTech Australia Finnie Awards 2019 – Excellence in Industry Collaboration & Partnerships


While the dynamic has changed, there is still a level of commercial model can lead to tension in Summary viewpoints taken from financial
frustration amongst incumbents who feel many collaboration. Being less dismissive of the inherent services incumbent interviews
fintechs show little empathy and do not truly legacy challenges – ‘a bit of respect would not go
appreciate the environment in which they operate. astray at times’. Fintechs need a clear compelling
Based on our interviews, here are the eight things business case that will address not only the Fintechs can show a bit more respect for
incumbents want fintechs to take into account when customer experience but risk and compliance. our risk and regulation landscape. It is in
working together: place for a good reason and it is complex. Fintechs
6. Appreciate the complexity/help with the
would do well to walk a little in our shoes when
1. Understanding the risk and regulatory navigation… Fintechs that want to embed in the
you approach us.
constraints… Incumbents are trusted to hold and centre of core applications need to navigate
protect customer relationships and to hold their security, privacy and risk and compliance standards.
data in safe custody. It is something that is integral Most fintechs find it a helpful exercise and it
at all levels of the financial services organisation. ultimately supports their scale up ambitions though
it can have significant cost on the startup/scaleup.
2. Appreciate the remediation… Fintechs need to do It has been a positive step to work with
more homework on the context within which the 7. Prioritise the customer… Financial services fintech startups; it has opened our thinking
incumbent operates – particularly the scale of the incumbents have a large customer base that has to new ways to solve long standing business
prudential driven remediation that is taking place. been earned over a long period time; protecting the issues. They have courage to tackle problems in
customers’ interests is their primary driver. ways that we can’t.
3. Align with legacy technology… Changing the Fintechs need to demonstrate how they can ‘wow’
enterprise software and operational software is a the customer.
major expenditure. The advice is to ensure that
fintech solutions factor in the complexity of change 8. Have patience… If the fintech is under cash
when coming with innovative technology solutions. pressure from their burn rate or lacks scale to
Partnering with Fintech's has worked
develop the context, it is suggested to better
4. Recognise the commercial constraints… Banks best through setting up joint ventures,
sequence their business growth by not approaching
face prioritisation challenges for their Opex spend. allowing both parties to have 'skin in the game’.
the ‘major’ first. It is fact that the banks and major
Fintech innovation pilots/PoCs/Adoption are financial services organisations are of such a scale
evaluated and prioritised against other revenue and complexity with environments that will take
generating business cases. time to navigate — therefore, if revenue is an
immediate need, it will be wise to develop
5. Have a robust commercial model…Fintechs can
credentials with smaller, more nimble organisations.
approach with an ‘idealistic’ view of what they bring
Only approach the larger organisations when they
and overestimate the value to customers.
have more capacity to be patient.
Overestimating the viability of a proposed

Introduction About the research The Australian fintech landscape Drivers of

of success
success Future focus Contact us
Drivers of success


of success
Drivers of success
5 drivers of fintech success
Around the world, fintechs have grown up and out –

improving and expanding their offerings, driving
increased consumer awareness and uptake, and 1 Talent
spurring change across the entire financial services

ecosystem. Underpinning this are the dynamic
fintech eco-systems which support the startups and
scaleups based on drivers of success in talent,
2 Capital
capital, government initiatives and policy and

environment.
James Lloyd
3 Demand
EY Asia-Pacific FinTech and Payments Leader
As the sector continues to grow and expand at pace,

the drivers of success for Fintechs hold true. 4 Policy
Consistent with previous years, the Census underlined
five key drivers of success. Importantly, these are
consistent with the extensive analysis conducted by EY
teams on the international fintech scene. Collectively, 5 Environment
these drivers of success will create an ecosystem
where the Australian Fintech industry can flourish.
For each driver of success, a number of variables can

have an impact on fintechs – either at an industry-wide
level, or from an individual firm perspective. We have
isolated these factors and the discussion around the
drivers unfolds over the coming pages.


of success
1 Talent Perception of local talent

% believing ‘There is a lack of experienced
startup and Fintech talent in Australia’
Talent is consistently cited as one of the main  Talent not the dominant issue… When the list of
challenges facing the founders and owners of fintech internal challenges is analysed, attracting suitable
organisations. The main areas of concern revolve or qualified talent drops to third place (down from 58%
around accessing and sponsoring skilled migrants 45% in 2018 to 41% in 2019). The bigger challenges
combined with a local shortage of specialist skills in for fintech leaders were product development and 52%
50%
engineering and software development. These are product and market fit.
challenges for all organisations in tech generally, but
the pressure becomes more pronounced in the fast  Evolving needs… As an industry becomes more 43%
growth world of fintech. mature and profitable, there is typically a stronger
emphasis on customer acquisition, product
While the recruitment and retention of talent will development and the enhancement of go-to-market 2016 2017 2018 2019
remain an issue, we have seen a significant shift in strategies. This is reflected in the type of talent that
is proving difficult to attract - with sales and Base: All surveyed fintechs (120)
perceptions over the four years in which the Census
has been run. There has been a 15-point drop since marketing talent becoming more pressing areas for
2016 in the percentage of fintech leaders who believe recruitment than they have been in the past. Of
those fintechs that struggle to attract qualified or Female representation in the fintech workforce
there is a lack of experienced startup and fintech talent
in Australia (58% in 2016 vs. 43% in 2019). This suitable talent, recruiting suitable engineering or % of female employees
reflects a more mature fintech sector and the software talents remains the top challenge for
continued development of the tech sector more seven in ten (69%), although this is less pronounced 32%
generally. than last year (76%).
28%
Three observations can be made about recruitment and When we look at the profile of people working in the 24%
22%
retention from the 2019 Census: fintech industry, we see:
 Less offshore demand… There has been a slight  A strengthening representation of females in the
decline in the proportion of fintechs indicating that industry… The proportion of females employed at
easier access to the skilled migration visas would be fintechs has gradually increased over the last four
effective in tackling recruitment issues (66%, down years, growing significantly from 22% in 2016 to
from 75% last year). 32% in 2019. 2016 2017 2018 2019
(156) (164) (143) (113)
Base: All surveyed fintechs excl. don’t know (as shown in chart)


of success
 A diverse talent pool… It is estimated than an which can reduce their availability for work in Female representation
average of one in five fintech employees are from general.
either a Culturally and Linguistically Diverse (CALD)
or Aborginal or Torres Strait Islander (ATSI) − Females are believed to be more risk-averse
background (18%). than males which makes it less likely for them to
invest in startups or other capital ventures.
An area that is explored in detail each year is the ► Founders and CEOs tend to have established
profile of the leaders of fintechs. The main points to multiple startups… Fintech leaders have founded
emerge this year are: on average 1.9 startups, consistent with recent
years. One in three (32%) CEOs or founders report
 Stronger representation of female founders… This
wave, 27% of fintech leaders report having female
founders – representing a slight increase since last
founding only one startup, but the largest
proportion (37%) have founded three or more 32% 27%
startups to date. Proportion of females of fintechs have a
year (19%). Whilst the increase in female fintech employed in fintechs female founder
leaders is encouraging, more needs to be done to
 Slightly younger fintechs venturing into Base: All surveyed fintechs Base: All surveyed fintechs
improve the gender balance within this male
startups… The reported founders’ age at the time excl. don’t know (113) (120)
dominated industry (e.g., gender focussed
of founding has become younger, at an average of
initiatives such as reverse mentoring and male
39 years old compared to 41 last year. Further, the
champions for change). Several factors have been
current age of founders has remained consistent
hypothesised as key barriers to gender equity within
over the past three years at an average of 42/43,
the industry…
despite the industry ageing in this time.
− Fintech founders tend to transition from a

 Leaders hail from a more varied educational
financial service background, where there is The stronger representation of women in
background… Consistent with the previous years,
markedly stronger participation from males. fintechs is encouraging. However, more
fintech leaders are highly educated, with close to
one in two holding a postgraduate degree (47%). industry-wide action is needed so more women
− Gender pay gaps widen as females progress in
their career, which can result in smaller savings This represents a slight decline since last wave, feel secure to join fintechs.
and capital for creating the necessary runway where 55% of respondents held a postgraduate
Rebecca Schot-Guppy, General Manager, FinTech
for startups. degree.
Australia
− There are typically greater expectations for

females to take care of family responsibilities,


of success
Fintech leader profile 2019

Gender Founder Current role
CEO 56%
73% Average
Yes
of fintechs 43 founder 43%
have all male yrs age
Head of a 4%
founders functional area
CTO 4%
Highest level of education (founders/CEOs) Number of startups founded/started by Support role 2%

fintech founders/CEOs
Other 2%
47% 38%
Post graduate Undergraduate
average
6% 9%
1.9
37%
High school Vocational
certificate
32%
26%
Work status
97% 3%
Work full-time Work part-time
1% 0% 5%
Work on a
casual basis
Studying
part-time 0 1 2 3+

of success
2 Capital Capital raising
Capital is critical for growth and success. Regardless of − Fintechs that have managed to access
the strength of an offering or the projected demand in commercial funding are more likely to have
the market, startup and second stage fintechs need to raised the amount of capital required (aligns 38%
be able to raise capital and manage the burn rate each with previous waves). Had their expectations
month. of capital raising
experience met
► More limited levels of investment… Over time, we
While capital raising remains reasonably active, we have observed that more established fintechs tend
have seen a slowing in investment compared to to attract greater capital investment when
previous years. This trend is not just isolated to compared to newer entrants to the market, perhaps
Australia, with a recent global downturn in investment considered a lower risk to potential investors. Whilst
due to the US-China trade dispute. The two areas, at a this remains true in the current wave of the Census,
global level, that have been insulated are the more established fintechs have been hit harder
payments/wallet and neobanks3. by a recent tightening of purse strings. When
compared to last year, a significantly lower
In Australia, five main observations can be made about proportion of mature fintechs successfully raised
the dynamics around raising and managing capital in over $1M in their most recent attempt of capital
the fintech sector…
 Diminishing access to funds… Capital raising

raising (80% in 2018, 57% in 2019). Fintechs
established within the last 3 years have also 75% 66%
experienced a decline in funds since last wave, Private funding Commercial funding
amongst Australian fintechs has been more
although less pronounced than their more mature
challenging in recent times – in terms of both
counterparts.
accessibility and quantity. This year, Fintech Census
respondents report:
− Weakened success in capital raising (38%, down

from 43% last year).
− Further, amongst those who have attempted to

raise capital, the last round of capital funding
was less successful than in previous years (45%
raised over $1M, compared to 63% in 2018).
3 Accenture report, cited in ‘Payments Industry Intelligence August 15 2019’ by Alex Rolfe


of success
 Skewing to more experienced players… Funding is When we look at how effectively fintechs are managing Funding sources
becoming more conservative and in favour of the their capital, three observations can be made:
more established and experienced fintechs. Most
 Increase in post-revenue… While a relatively high 26% Both private and
particularly, challenger/neo banks continue to commercial funding
succeed in drawing debt funding (as opposed to proportion of new participants contributed to the 40%
Census this year, the proportion which are 'post- Private funding
capital) to support mobilisation and customer
revenue' has reached a new high, having increased only
acquisition. With the absence of such mega deals in
the second quarter of 2019, funding from the significantly since the Census’ inception in 2016 Commercial
(57% in 2016 vs 77% in 2019). 34% funding only
venture capital sources for Australian fintechs
pulled back significantly to $10.6m4.
 More fintechs are profitable… Encouragingly, Base: All surveyed fintechs (120)
although not surprising for a maturing industry, the

 Private funding a bedrock… Whilst commercial
proportion of fintechs who are realising profit has
funding tends to be a more lucrative avenue for Profitable fintechs (post-revenue)
grown over the past four years. One in four (23%)
capital raising, private funding continues to play an A greater proportion of fintechs are
fintechs are currently profitable, with marginal but
important role amongst fintech startups. For most, profitable this year
steady increases reported in the past two years. 2019
having access to a private source is critical for
2018 23%
success when starting out. This year, three in four  Better cash burn rate management… Of those
fintechs report have received private funding. that have not started to realise profit, their current 2016 2017 19%
burn rate is on average $113k per month, 14% 14%
One in three fintechs have exclusively accessed
contracting slightly compared to the peak monthly
private funding since inception (34%), with the
burn rate of $121k seen last year. A strong
majority indicating they have never tried to raise
majority of fintechs (73%) have up to 12 months of
capital externally.
runway left at their current burn rate. Consistent
with last year, 30% of fintechs have a monthly burn
 Founders ‘self-funding’… We observe that Monthly burn rate
rate in excess of $100k. The average burn rate
founders are more predominantly funding the $121k
increases amongst more established, larger and $115k $113k
industry. The proportion of founder-funded fintechs
more funded fintechs. Businesses raising over $1m
has increased significantly from 60% in 2018 to
in capital since inception have an average monthly
75% this year, reversing a gradual decline observed $84k
burn rate of $178K.
in founder funding previously observed.
2016 2017 2018 2019

(140) (142) (122) (92)
Base: All surveyed fintechs, excl. not answered (shown in chart)
4 CB Insights - Global Fintech Report Q2 2019


of success
Global fintech adoption
Markets Adoption
China Mainland 87%

3 Demand India 87%
Russia 82%
South Africa 82%
Colombia 76%
The fintech sector has seen remarkable growth over  Different propositions… We are seeing two main
the past few years. Around the world, fintechs have types of fintech propositions: ‘disrupted’ and Peru 75%
grown up and out – improving and expanding their ‘invented’. A disrupted service is one that has Netherlands 73%
offerings, driving increased consumer awareness and historically been offered by incumbents (e.g., Auto Mexico 72%
uptake, and spurring change across the entire financial insurance or FX). Fintech providers use technology Ireland 71%
services ecosystem. to disrupt these services and to provide a more UK 71%
compelling offer. An invented service is one that
Argentina 67%
And consumers are liking what they see. In fact, the EY didn’t exist before but is now possible by
Hong Kong 67%
Global FinTech Adoption Index 2019 shows almost two- technology's or alternative business models (by
thirds (64%) of digitally active consumers globally now peer to peer lending and mobile phone payments). Singapore 67%
use FinTech products and services – up from just 33% in South Korea 67%
2017. Although starting from a higher base than many other Chile 66%
Asian markets, Australia’s adoption rate has dipped Brazil 64%
In our recent Global Index, we made four observations slightly below the global average coming in at 58%. This Germany 64%
about the sector as it stands in 2019: compares to 13% in 2015, 37% in 2017. While fintech Sweden 64%
use in the Australian market continues to rise, the pace
 True competitors… Fintechs are no longer just Switzerland 64%
of local adoption has slowed in comparison to emerging
disruptors, but have grown into sophisticated Australia 58%
markets, although this may change with the introduction
competitors with a global reach. Spain 56%
of Open Banking and as more challenger fintechs
continue to come into the market. Italy 51%
 Blurred lines… With many financial incumbents,
such as banks and insurers, offering credible fintech Canada 50%
propositions of their own, this begs the question The two main reasons for the comparatively slower USA 46%
‘what is a fintech?’. growth in Australia compared to other markets are: Belgium and Luxembourg 42%
 The global average is boosted by markets with less France 35%

 Ecosystem development… The interaction
developed banking and insurance infrastructure Japan 34%
between challengers, incumbents and players from
outside the financial industry are forming fintech (e.g., China Mainland, India, Russia).
ecosystems that are replacing traditional bilateral
partnerships.
 Many of the markets with the highest adoption also Average global adoption 64%
have markedly different population profiles – in size
and in socio-economic composition. Source: EY Global Fintech Adoption Index 2019


of success
Fintech adoption in Australia  As we have seen in previous years, the data from
our Census shows most fintechs believe the very
 Money transfer and payments services are more reason that consumers or businesses access their
popular among young tech savvy generations, while products revolves around them offering ‘more There is much greater awareness of the
insurance services are more popular among the 65+ effective solutions’ and ‘having a seamless user different options and a much greater propensity
age group. experience’. to consider new digital-led solutions,
 Adoption of fintech propositions do not differ Detailed data from the Global Fintech Adoption Index particularly in the post-Hayne environment.
significantly across income levels except insurance has been provided overleaf. One of the biggest challenges for B2C fintechs is
where adoption is greater at higher income levels. to build brand awareness and brand equity. The
Where to from here? most successful consumer-facing fintechs in
 Consumers are drawn to benefit-led innovation and
better value, but one of the inhibitors to recent years have built a connection with
No longer just disrupters, fintech challengers have
consideration/uptake is awareness. Generating consumers and positively differentiated
grown into sophisticated competitors, with an
presence is a significant challenge for newer themselves from the established players and
increasingly global reach. Fintech firms are setting the
startups. their fintech peers. The strength of the brand
benchmarks for the financial services industry. Their
 For non-adopters, awareness and understanding of offerings are attractive to consumers, and usage will will always be a major variable in success.
fintech continue to be the main reason for using an only rise as awareness grows, consumer concerns fall Marc L’Huillier,
incumbent FI over a fintech challenger. A significant and technology advances to reduce switching costs. At Managing Partner, EY Sweeney
percentage continue to trust FI and do not see any the same time, many incumbent financial institutions
advantages of using fintech challengers. are also starting to offer credible fintech propositions
of their own, challenging the whole notion of what a
Consumers are increasingly becoming comfortable 'Fintech' is and adding to the choices available in the Australian consumer fintech

in sharing data with fintechs and non financial market. adoption in 2019 58%
services providers. They are more comfortable
using non-financial services firms if they partner Looking forward, the pace of innovation is likely to
This is driven by greater use of :
with incumbents. continue to accelerate, becoming the 'new normal'
within the sector. Greater interaction between
 The majority of Australian consumers still turn to challengers, incumbents and players from outside the money
existing financial services providers to buy new financial industry will continue, leading to the 78% transfer and 48% insurance
payments
financial products, but are also exploring options formation of new fintech ecosystems, and replacing
suggested by price comparison websites. traditional bilateral partnerships, as the sector
continues to evolve, both locally and globally.


of success
Fintech adoption in Australia Categories and services
Australia and global adoption Adoption rate by category Data-sharing in Australia (%)
58% I’d be comfortable with my main bank securely sharing
Category Australia Global
my financial data, if it meant that better offers from…
Global
Money transfer and payments 78% 75%
Australia 37% Other traditional financial
Insurance 48% 48% 25%
services companies
Savings and investments 24% 34%
FinTech challengers 18%
16% Financial planning 17% 29%
13% 33% 64%
Borrowing 16% 27% Non-FS companies 14%
2015 2017 2019
Fintech adoption across age brackets (%) Top reason for using fintech amongst Australian Non-financial services in Australia (%)
adopters
Australia Global In regards to non-financial services companies providing
76% More attractive rates or fees financial products, I would be happy to use them if...
69% 68% 70% 36%
67% 67% 61%
58% 55% They were working with a
Access to different and more 32%
44% traditional FS company
40% 43% innovative products and 16%
services They were working with a 13%
fintech company
Easier to set up an account 15%
They were working on
9%
18-24 25-34 35-44 45-54 55-64 65+ their own
Fintech adoption across income brackets (%) Top reasons for using incumbents amongst New financial services products in Australia (%)
Australian non-adopters
Australia Global When buying a new financial policy or
69% 72%76% product, I would typically first turn to …
65% Not aware or limited
60% understanding of how fintech 27%
49%
54% 50% companies work My existing bank or insurance company 63%
Greater level of trust than
22%
Options suggested by a price comparison site 11%
with fintech companies
Another FS company that I don't have a relationship with 7%
Don’t see the advantage of
Lowest Second Third Quartile Highest fintech challengers over 17% Challenger that I currently have a relationship with 3%
Quartile Quartile Quartile traditional companies
Source: EY Global FinTech Adoption Index 2019. For a copy of the full report, click here EY FinTech Australia Census 2019 | 28

of success
4 Policy Fintech timeline:

Positive policy developments
Appropriate policy, regulation and broader government fintech industry and at the time of writing, initial
support are crucial for the continued development of feedback from interactions has been good. This is a JUL 2016 Tax incentives for investors in
Early stage innovation
the fintech sector and imperative if Australia is to be much-needed addition to the already strong level of
companies (ESICs)
globally competitive. In recent years there have been a support from State Governments which has been in
number of policy initiatives set in place to help the place for the past four years. DEC 2016 ASIC Regulatory Sandbox
Australian industry realise its potential (see the launched
timeline opposite). However, despite the various As in previous years, we explored a wide range of
initiatives, for the first time we have seen an increase potential growth initiatives with participating Fintechs. JUL 2017 Double GST removal from
in dissatisfaction around government policy. There is a Those considered most effective in the eyes of digital currency transactions
belief that the Federal Government is less supportive Australian fintechs are:
than overseas jurisdictions (45% in 2018 v. 63% in SEP 2017 Equity Crowdfunding legislation
2019). ► Making the R&D tax incentive more accessible (88% in effect
'effective')
On the tightening regulatory framework on Australian FEB 2018 New Payments Platform (NPP)
► The implementation of Open Banking (85%) launched
fintechs, one in two fintechs express concern,
perceiving that the level of regulation is ‘excessive’ ► Reduction in taxes associated with hiring
(48%). This negative sentiment is perpetuated by JUL 2018 Comprehensive Credit
employees, such as payroll taxes (83%)
Reporting (CCR) expansion
continued barriers to accessing offshore talent through
a skilled migration visa, and a further reduction in the ► Capital gains tax relief for tech start ups first
incorporated in Australia (82%) SEP 2018 Equity Crowd Funding extended
R&D Tax incentives.
to private companies
It is to be noted that post Census data collection, the

The full list of potential growth initiatives is APR 2019 Export Market Development
Federal Government made a couple of significant
summarised in the chart overleaf. We also place the Grants Scheme $60M top-up
announcements related to financial services announced
spotlight on a number of hot topics – the R&D tax
innovation. Firstly, the appointment of the Assistant
incentive, The Export Markets Development Grants
Minister for Superannuation, Financial Services and JUL 2019 Consumer Data Right legislation
Scheme, Launchpads, Talent and Open Banking/CDR.
Financial Technology and secondly, the establishment (Open Banking) passed
of a Senate select committee focused on fintech and
regtech. Both have been very positively received by the FEB 2020 Open Banking Phase 1 launched


of success
Potential growth initiatives
Very effective Fairly effective Net Net Net Net

effective effective effective effective
Not very effective Not at all effective 2019 2018 2017 2016
Make the Research and Development tax

60% 28% 10% 88% 87% 87% -
incentive more accessible to startups
Implementation of Open Banking 48% 38% 13% 85% 85% - - 88%

Make the Research and
Reduced taxes, such as payroll taxes, which Development tax more
45% 38% 14% 83% 85% 83% -
apply when hiring employees accessible to startups
Capital gains tax relief for tech startups first
53% 28% 16% 82% 82% 85% 87%
incorporated in Australia
An expanded and more flexible regulatory
40% 36% 21% 76% 69% 78% -
sandbox environment
More transparent access points for fintechs
to connect to the New Payments Platform
30% 46% 21% 76% 74% 82% - 85%
A cross-industry solution to share know-your- Implementation of Open
33% 42% 21% 5% 74% 75% 75% - Banking is an effective
customer and identity validation information
initiative to grow and
Creation of more referral agreements
24% 48% 23% 4% 73% 64% 57% 66% promote the industry
between ASIC and Regulators in other markets
Removing barriers to the creation of new
24% 44% 23% 9% 68% 75% 81% -
banking licences
Easier access to skilled migration visas to be
28% 38% 31% 66% 75% 67% -
able to hire new employees
Creation of more Government Launchpads in For the fourth year, R&D Tax tops the list of
22% 39% 28% 12% 61% 60% 54% 56%
other overseas markets
Programs and grant assistance to access the policy initiatives concerning the fintech
existing Government Launchpads in Tel Aviv, 19% 42% 31% 8% 61% 70% 64% 64% community as it provides vital support for our
Shanghai, Berlin, Singapore and San Francisco
Opportunities to pitch for Government growing and highly innovative industry. The
28% 33% 24% 16% 60% 67% 58% 61%
tenders and projects scale back of the scheme has certainly
A government-supported digital sovereign
34% 33% 40% - continued to disappoint the community, and
currency (i.e., a Digital Australian Dollar) 11% 23% 38% 28%
will likely further impact on Australia’s fintech
Base: All surveyed fintechs (120). Labels 3% or below are not shown. offerings.
Q26a. How effective do you believe each of the following initiatives might be for growing and promoting the Australian fintech industry?
Dr Carla Harris, Board Member, FinTech Australia


of success
Export Market Development Grants Scheme Access to international markets
A further $60M top up to the Export Market This year, the results reveal tapering interest in
Development Grants (EMDG) Scheme was passed in the government initiatives focussed on supporting We need to try to keep up with efforts in US,
2019-20 federal budget, making this support program overseas market entry. This includes support for Europe and Asia who are moving much faster.
available over a three-year period to eligible tech programs to access existing Launchpads (61%, down
startups of smaller scales (whose annual revenue is from 70%) and creating new ones (61%, consistent with Fintech Census participant
less than $50M). This is a welcome boost to all startups last year). Fintechs seem to be less convinced on the
who have their eyes on international markets, however effectiveness of Launchpads which is likely due to a
are lacking in runway. lack of alignment with emerging markets of interest. Australia is too conservative and not willing to
invest in startups based in their own backyard.
There is currently a cap of two grants available to each Furthering ASIC’s work in creating referral agreements
So we are losing talent to Asia and USA.
eligible startup, and further grants can be secured if between markets is emphasised as an effective
eligibility criteria are met. In the last financial year, mechanism, with a stable increase year-on-year since Fintech Census participant
grants worth $131.6 million were paid to 3,706 2017 (now 73%).
different companies, with an average grant of just over
$34,0005.
Fintechs agreeing that access to
Access to Talent international markets would be effective
A review of the EMDG was recently announced, with Earlier we discussed the growing confidence in local
results to be delivered in March 2020. The review will talent within the industry. This may explain a
seek the views of exporters and other interested weakening perception that easier access to skilled
parties in examining the most effective and efficient migration would be an effective mechanism for growth
way the Government can use these funds to provide (66%, down from 75% in 2019). There is also a
assistance to SME exporters in promoting their perception that acquiring access to offshore talent is a
products and services overseas. good idea but execution remains challenging. Looking
forward, proposed changes to skilled migration visas
are in place but a shift in mindset amongst fintechs is
still required for the initiatives to be fully utilised.
61% 61%
Programs and grant Creation of more
assistance to access the Government
existing Government Launchpads in other
Launchpads in Tel Aviv, overseas markets
Shanghai, Berlin, Singapore
and San Francisco

5 Austrade Annual Report 2017-18


of success
Open Banking/Consumer Data Right (CDR)  The greatest motivators to connect to CDR are Top 3 motivators for connecting to CDR
Legislation greater transparency in the process of obtaining
Greater transparency in
consumer data, and the expected increase in the process of
volume and speed of the data exchange. obtaining consumer 71%
With the first phase of Open Banking coming online in
data
February 2020, this is high on the agenda for fintechs,
 The main reasons for not expecting to obtain
the Big 4 banks and the ACCC (the agency charged with More direct/faster data
accreditation are a lack of relevance or need for exchange 69%
overseeing implementation).
their business, and an expectation that the process
will be laborious and costly. A high number of Increased governance
The CDR finally passed into legislation in July this year over access of
fintechs state that they do not know enough about consumer's financial 58%
after a protracted journey. In conjunction with defined
CDR and the requirements of becoming an information
data/API standards and rules, the implementation
accredited provider.
program is now well underway. As the leading industry,
Base: Organisations planning to connect to CDR (48)
Banking will deliver consumer data sharing first.
From our interviews, the views of the founders on the
Whilst most APIs are mandated to provide consumer impact and implications are:
data on request, there are opportunities for accredited
data recipients to bring new products and services to  Consumer awareness is low with most Australian
having no idea of how Open Banking will bring value Top 3 reasons for uncertainty around
market. This unlocks data, within a safe data sharing
to the way they conduct their day to day financial becoming an accredited provider
framework, to other firms. Phase one of CDR will see
the Big 4 banks release APIs providing competitors services.
(including accredited fintechs) with access to individual I don’t know enough
 As one founder said, 'Make it real for the tradies; about it 50%
consumer data on credit and debit cards, deposit and
make it easier and quicker for them to get paid and
transaction accounts. In later phases, the bill will cover
you will start adoption'. As the initial poor UK
super/pensions, mortgages, telecommunication and Still weighing up the
adoption has shown, consumers need to be pros and cons 30%
energy usage.
educated upfront on what it means for them, what
privacy and security safeguards are built in and how
In our research with Australian fintechs, we saw: I don’t know anything
they can gain access. 10%
about it
 Four in ten (40%) anticipate becoming an accredited
 While there is agreement that more consumer
provider of CDR when Open Banking is launched. Base: Organisations unsure about connecting to CDR (30)
awareness is needed, there is also a feeling that it is
 Of those, six in ten (60%) would connect to CDR positive that it is not being oversold to consumers
alongside other means of accessing consumer too early. 'It will take time for the positive outcomes
financial information and relatively few plan on for consumers to be clear and it will take time to
connecting to CDR in place of other processes catch on' was a common sentiment.
(25%).

of success
POINT OF VIEW: THE EY OPEN BANKING TEAM
Unlocking Australia’s Open Banking potential
Unlocking Australia’s Open Banking participants to innovate. In other words, Australians

1 are fully prepared to be delighted by Open Banking –
potential
provided we can get the data security right and put
Open Banking is arguably one of the most disruptive compelling offers in front of them.
forces of change currently affecting the banking sector.
From a consumer perspective, Open Banking offers a
2 Make it safe
secure way for customers to grant providers access to
their financial information, empowering them through Australians are early technology adopters, but we also
increased ownership of their financial data and easier tend to have somewhat conservative attitudes when it
access to a range of financial products and services. comes to privacy and security. In the Index, trust in the
For the financial services industry it opens a range of security of data came through as a key local market
new market opportunities and increased opportunity concern. Overall, Australia ranked ninth on their
for innovation and collaboration. However, while it’s willingness to share transaction data with fintechs.
fast becoming a global phenomenon, Open Banking However, when Australian consumers were asked the
adoption varies widely around the world. same question but with an added assurance that there
would be effective controls over the security of the
To track its progress, EY developed the Open Banking
data exchange, we jumped up into fifth place.
Opportunity Index which assesses the potential for
successful Open Banking adoption across ten key This need for data security and protections is also
markets globally – Australia, Canada, Germany, Hong reflected in the global results. In fact, half of the
Kong, mainland China, the Netherlands, Singapore, negative sentiment in consumers’ online discussion
Spain, the US and the UK. By looking at a range of across the ten featured markets relates to concerns
indicators across four key pillars (regulatory around data protection and cybersecurity, as
environment, innovation environment, consumer consumers worry about the potential for fraud and the
sentiment and adoption potential), the Index paints an misuse of their data by third parties.
interesting picture of how Open Banking is evolving
across the globe. The good news here is that Australia has a strong
regulatory climate. We also have the opportunity to
Australia ranks right in the middle of the markets leverage and learn from the UK’s Open Banking
surveyed, coming in at number five overall on the implementation experience. So, getting the data
Index. Our research shows Australian consumers are security right and offering appropriate safe-guards and
positive but cautious about Open Banking, requiring assurances for consumers is entirely feasible.
regulators to control security and, importantly,


of success
Open Banking offers opportunities for organisations to

3 The case for innovation
redesign the customer journey; making it easier for Contact the EY Open Banking team
Australians to assess, select and manage their
In our Open Banking online discussion analysis, EY multi-disciplinary Open Banking and
finances. Maximising the benefits of Open Banking, for
Australia was the top performer of all markets in the Technology Consulting team can assist if you
both consumers and financial institutions, will depend
study based on net online sentiment, with 40% of all have questions about the implications of Open
on organisations’ abilities to use innovation to drive
posts expressing positive sentiment, particularly Banking for your business.
more value from the mandated changes that are on
around the topics of service innovation and increased
their way. Those that think cleverly about how to Written by: Mike Orman, Partner, EY Financial
consumer choice. So, there is a huge market potential
compete will be in an excellent position to unlock Services Advisory and Mike Booth, Director,
here. Australian consumers are willing to be delighted EY Financial Services Advisory.
increased market potential.
by Open Banking but, to fully engage them, financial
institutions will need to move beyond just compliance,
to competition. You can view the full Open Banking insight paper for
Australia here.
Our Index shows that several elements need to come
together in order for Open Banking to be successful.
Consumer sentiment is clearly a key driver, however
that, in turn, is at least partially driven by having
innovative and interesting offerings available in the
market. If Australian banks and financial institutions
only do the minimum needed to comply with the new
Open Banking regulations, they risk missing a
significant opportunity to engage with and attract
customers.
Australia currently ranks sixth in terms of innovation on

our Open Banking Opportunity Index. While not a bad
result, it does leave plenty of room for improvement.
The challenge now is to embrace, rather than resist,
the impact of Open Banking. We need to foster an
environment that promotes innovation, competition
and the creation of compelling use cases. Embedding a
culture of collaboration and partnerships will also be
essential.


of success
Research and Development tax incentive Glimmers of clarity and certainty for the
Australian R&D tax incentive on the horizon
Tax related initiatives are again considered the most
effective initiative to grow and promote the fintech The R&D tax incentive provides crucial support for We continue to say it, the R&D tax incentive is
industry in Australia. The Research and Development Australian fintech organisations. Throughout 2018 and incredibly important for the growth of the
(R&D) tax incentive is the primary channel used by the 2019, increased regulator scrutiny, policy and budget fintech ecosystem and technology sector.
Federal Government to reward and promote local uncertainties and repeated critical media coverage
innovation. have put a spotlight on the Incentive, including Rebecca Schot-Guppy, General Manager, Fintech
investigation by small business ombudsman Kate Australia
The importance of the R&D tax incentive to the industry Carnell into the enforcement of the R&D tax incentive
cannot be underestimated, as evidenced by the large program following numerous complaints about unfair Application for R&D Tax
number of fintechs who have successfully applied or treatment from the ATO and AusIndustry about SME
are in the process of doing so (64%). Further to this, R&D Incentive claims.
76% of fintechs indicate that the R&D incentive helps
keep aspects of their business onshore. Recent events should give fintech organisations a
positive outlook for continued support from the
In the 2019 budget, the Federal Government incentive, and increasing clarity and certainty in
announced a cut of $1.35B in R&D tax incentives over program policy and administration.
the forward estimates. This adds to a sum of more than
$2B that was effectively stripped from the previous Over the next few pages, we provide a deep dive
budget. perspective on the R&D tax incentive from the EY
Government incentives team. 58% 76%
The absence of an effective R&D scheme would restrict Successfully applied Agree having access to
the innovation and monetisation of Australian fintech for R&D Tax R&D incentives
increase likelihood of
offerings. Coupled with more competitive access to keeping aspects of
commercial funding, a dwindling pool of tax incentives business on shore
means that Australian fintechs need to be even more
conservative in their spending and more strategic in Base: All surveyed fintechs (120)
their go-to-market approach.


of success
POINT OF VIEW: THE EY GOVERNMENT INCENTIVES TEAM
The importance of the R&D tax incentive
Industry responses in Senate enquiry Full Federal Court rejects regulator’s

1 reject proposed changes to Incentive
2 narrow approach and provides certainty
for R&D activity eligibility
 In September 2018 a contentious bill was To make R&D investment in Australia globally
introduced to parliament imposing significant cuts R&D claims have been subject to increasing regulator
attractive and sustainable, we need stability,
to the R&D tax incentive. A Senate enquiry into the scrutiny. A recent landmark decision by the Full Federal
clarity and ease of accessibility to government
bill involved three public hearings and 75 written Court in favour of an R&D Incentive claimant has
submissions R&D claimants, advisors and industry affirmed a common-sense approach to interpreting the incentives. The Fintech Census process
groups, with broad opposition to the proposed R&D eligibility criteria. The claimant, Moreton confirmed that innovation come in many forms
changes. Of key concern was the contrast between Resources, appealed an earlier decision by the and that we need a longer term view and
cuts to the Australian incentive while there is Administrative Appeals Tribunal (AAT), which found investment, not savings, to ensure Australia is
increasing availability of R&D tax incentives that the disputed activities did not meet the regulator’s not sidelined in the global financial services
overseas, with many responses suggesting that interpretation of the R&D eligibility criteria. The Court
innovation race.
they would consider shifting their R&D offshore. found that the AAT approach to defining ‘experimental
activities’ was too narrow, and that the concept can Malia Forner
 The Committee recommended that the measures include applying existing technologies in new contexts, Partner, EY Government Incentives
and implications were examined in further detail including site-specific contexts. By analogy, it follows
before being considered by the Senate. As a result, that these judicially binding principles could be related
the bill lapsed following the May 2019 Federal to fact patterns in other industries, including the
Election, and measures have not been re-introduced technology industry. The Court also supported a
to Parliament. The outcome is a positive result for holistic approach to considering experimental activities,
Fintechs, whose growth through on-shore R&D in contrast to myopic approaches taken by the
investment will receive continued support from the regulator in considering experiments only in isolation.
R&D tax incentive.


of success
 The Court highlighted the object of the legislation, The outlook

being to encourage industry to invest in R&D that Contact the EY Government Incentives
might otherwise not be conducted due to an  To retain individual talent, attract investment and team
uncertain return. Moving forward, a common sense encourage productive growth of the fintech sector
and commercial approach should be taken to amidst a looming productivity challenge and falling EY’s multi-disciplinary Government Incentives
team can assist if you have any uncertainty
purpose and meaning of the legislation in R&D business expenditure on R&D, Australia must be
about any R&D tax incentive claim, the impact
Incentive disputes. The judgement provides a much- competitive in both its support for R&D and its R&D of recent positive outcomes and outlook for
needed positive endorsement of the R&D incentive, Incentive administration. Generous R&D tax your claims, or regulator expectations of R&D
and may encourage fintech industry participants to incentive programs are available overseas, and for corporate governance. The team also offers
revisit eligible experimental activities. The decision Australia’s nearest neighbours Indonesia, Hong support in accessing other state and federal
may also give welcome support for R&D claimants Kong and New Zealand, are seeing increased grants nationally.
involved in current disputes. funding from Governments with popular support
Written by: Malia Forner, Partner, EY
from industry.
Government Incentives and Dr Dene Murphy,
R&D incentives and government funding – Senior Consultant, EY Government Incentives.
3 a needed key policy priority
 The Australian R&D tax incentive continues to be an
important source of support for Fintechs. To
 Welcomed, pragmatic actions are being taken by protect entitlement to the R&D tax benefits,
Minister Karen Andrews to improve the fintechs should gain an understanding of the key
administration of the R&D tax incentive. Following elements needed to support the technical, legal, tax
technology industry consultation the Minister and accounting eligibility criteria and continue to
announced she is working with regulators to give work with stakeholders to ensure strong, globally
companies greater certainty about claims made competitive and sustainable government support.
under the scheme, particularly in relation to
software R&D.
 With a backdrop of increasing clarity, certainty and

positivity, now is the time to change the R&D tax
incentive narrative to demonstrate the importance
of R&D incentives and government funding in
supporting the Australian technology industry in
terms of employment, export enhancement, as well EY Worldwide R&D incentives Reference Guide
as accelerating our global competitiveness. https://www.ey.com/gl/en/services/tax/worldwi
de-r-d-incentives-reference-guide---country-list


of success
5 Environment Accelerators and incubators are an

important contribution to the success of
the fintech industry (exc. Don’t know)
The environment in which fintech organisations However if expectations of the hub participants are
operate in Australia is one of the key drivers of not met, they will seek alternatives such as moving
success. A number of observations can be made around to co-working spaces (standalone).
the prevailing dynamics.
 Government support is vital… The impact of State
 Continued evolution… Over the past four years, the
environment for fintech startups to be incubated,
Governments’ supporting continued operation of
innovation hubs that are used, not just by fintech
66%
agree
20% 12%
Neither/nor disagree
nurtured and flourish has changed markedly. In but by broader technology startups, remains
2016, only Sydney had dedicated fintech hubs (as important to foster continued, and also attract Base: All surveyed fintechs (120) 3% don’t know
opposed to broad technology startups). Come international participants, to connect with the
forward four years and all east coast capital cities upcoming startups and as a place for talent
have well established fintech hubs and there are incubation.
plans for expansion across the continent in the
coming 12 months. We continue to hear about the  Working collectively to support cross-industry
importance of strong support networks beyond the initiatives… Working together via FinTech
founder, the board (if there is one) and investors. Australia, fintechs have had a major impact on
The ability to effectively leverage peer and industry Government policy settings over the past four We have built strong connections across the
support is imperative. years. Fintech founders value this highly and fintech industry at home and also globally, in
highlight the importance of this approach to the large part driven by the work of FinTech
 Importance of co-working… Fintechs continue to creation of an 'effective regulatory landscape to Australia. We now need to prepare to support
highlight the importance of easy access to quality support effective fintech services for consumers'.
the next stage of fintech growth and scale, and
accelerators and incubators. Consistent with last
also have a role to play in strengthening
year, two in three (66%) agree that accelerators and
incubators play a vital role to the success of the consumer adoption, particularly through the
fintech industry. Hubs provide the fintech startups implementation of Open Banking.
with important formal support, but just as
Lauren Capelin, Deputy Chairperson, FinTech Australia
invaluable is the ability to connect with others in a
less formal environment. Users of hubs describe the
workplaces as a source of ideas, experience,
insights, expertise, accommodation and support.

Future focus

Outlook and optimism

Annual revenue growth %
Revenue in June 2019 compared to June 2018
As the industry has matured and grown, different types  More confidence in local talent… The proportion Revenue decline 11%
of challenges have emerged. Over the past 12 months, believing that Australia is wanting for local startup
some of the most prominent challenges have included and fintech talent continues to decline, with Nil growth 0%
progress on CDR, the cooling of investment confidence in the Australian talent pool significantly
1% to 100% 51%
(particularly at the start-up end), further cuts to the higher than it was four years ago in 2016.
R&D Tax, continued limitations around skilled migration 101% to 300% 14%
visas, amongst others. While the challenges are many  Internationally competitive… A majority of
surveyed fintechs believe Australian fintechs will be 301% to 700% 14%
and varied, overall a positive outlook still prevails.
Reflecting the optimism are a number of the highlights able to compete internationally (63%), up 4% from >700% 11%
in the 2019 Census data: last year. This belief is particularly evident amongst
fintechs who have ‘lived experience’ venturing to
 Better collaboration with incumbents post Royal overseas markets. The industry is also more likely to
Commission… When compared to 12 months ago, back the home team this year, with 48% stating
Median post-revenue growth
Fintechs are experiencing better access to and more Australian fintechs are capable of competing with
collaborative relationships with incumbents. For two international fintechs - compared to a more modest
in five fintechs, there has been a notable figure in 2018 (38%).
improvement in the relationship post Royal
Commission (42%), with just 8% perceiving a  Progressing towards a more diverse and inclusive
negative impact. industry… The positive trend in female participation
both within and at the helm of the fintech startups
 More fintechs are realising profit… With the heralds a promising outlook for gender equality
proportion of fintechs indicating they are in a post- within the industry. Post revenue Median fintech post-
revenue stage increasing significantly since last fintechs revenue growth
year (77% vs. 68%). In addition, fintechs indicated
median revenue growth of 80% from June 2018 to
June 2019. A slowing of median revenue growth in
77% 68% in
2018 80% In the past
12 months
the past three years may be attributable to the

increased number of newly profitable fintechs.
Base: Companies in post-revenue stage excluding ‘prefer not

to say’ (37)

Global reach
Future outlook
Australian fintechs continue to focus on overseas
expansion in the next 12 months
From Brexit and the US-China Trade Dispute, to recent  Singapore…It remains an attractive market due to
political unrest in Hong Kong, the current global climate proximity and language however difficult to Expand or expand further overseas
presents an added degree of potential instability within penetrate due to popularity and need for local
many major markets. This geo-political uncertainty credibility.
does make it more challenging for fintechs with global 2016 2017 2018 2019
ambition. Despite this, fintechs largely remain
optimistic about the opportunities that await offshore.
 Canada… An appealing market similar to Australia
with potential to provide a gateway into the US.
38% 54% 54% 51%
Australia’s fintech presence in overseas markets is Prospective expansion to Canada has rebounded
strong and forecast to grow further: this year (24%), following a minor dip in 2018
(13%). Base: All surveyed fintechs (120)
► Overseas presence… 41% of surveyed fintechs

 Hong Kong… While holding appeal in 2018, interest in
already have an established presence overseas. Top 8 markets for potential expansion
Hong Kong has also tapered a bit this year, dropping (excl. don’t know)
► Intention to go offshore… 51% intend to ‘expand or from 30% to 20%, potentially reflecting fintechs’
United Kingdom 44%
expand further overseas’ in the next 12 months. concerns about the uncertain political environment. 52%
 Japan… A market of significant scale with United States 42%

38%
Prospective destinations for expansion a relatively under-penetrated fintech sector.
Proactive government policies in areas such as e- New Zealand 38%
UK… Whilst still the top destination for expansion, 27%
 payments and Open Banking are increasing
the UK has become less attractive. More broadly, attractiveness. Singapore 31%
30%
we are seeing investments redirected to the EU –
markets such as France and the Netherlands, as a  Malaysia… A relatively dynamic and welcoming Canada 24%
market proves an attractive jumping-off point for 13%
result of Brexit concerns.
Southeast Asia. Progressive regulatory policies Hong Kong 20%
 US… Continues to grow in popularity particularly including a forthcoming 'digital bank' licencing 30%
the East Coast; driven by easier access to deeper regime should benefit new players. Japan 13%
capital funding options, the huge consumer n/a
potential and depth of niche fintech markets.  China… Appears to be the only casualty of the Malaysia 9%
current trade dispute (with expansion interest n/a 2019 2018
 New Zealand… Has jumped to #3, as it is easy to dropping from 13% to 5%).
Base: Organisations that plan to expand or further expand
expand into our close neighbour’s market with a overseas in the next 12 months excluding ‘don’t know’ (55)
similar regulatory landscape and co-banking model.
Inhibitors to overseas expansion Fintechs not intending to expand or expand

further overseas in the next 12 months
Of the 49% indicating they have no plans to expand reference the following reasons:
offshore in the next 12 months, a local growth focus Austrade is pleased to continue to provide
and time restraints continue to be the primary barriers. ongoing support to Australian fintechs through 54%
Whilst not significant, compared to last wave there is a opening doors to our global network and
Business plan is currently focusing
heightened sense of difficulty in the process – both assisting them with understanding global on the local market growth
from a perspective of exporting financial services and markets. Austrade recognises the importance of (2018: 54%)
in obtaining the funds to do so.
the fintech sector in scaling and flourish
For the first time this year, Census participants were globally, which will contribute to our nations
36%
asked to nominate the top three areas in which they prosperity and keep Australia on the map in
Lack of time to investigate
would need support in expanding overseas. Support is fintech. potential overseas markets
most sought in areas relating to developing customer (2018: 21%)
and business networks, and understanding the local Katherine Heathcote, Senior Trade & Investment Advisor,
Austrade
regulatory landscape. Fintechs are less likely to need
assistance in applying for a visa (11%) or opening 17%
business accounts (11%). Too difficult to export financial
services
The following were nominated as the top three areas of (2018: 9%)
support required for developing business overseas:
 Developing customer networks (66%)

15%
Difficulty in accessing private
 Developing business networks (64%) funding to help expand overseas
(2018: 10%)
 Understanding regulatory landscape (63%).

12%
Already happy with their current
expansion
(2018: 21%)
Base: Organisations that plan to expand overseas in the next

12 months or beyond the next 12 months (114)

Census participants*
255 Finance Cwedit Longevity App Rollit Super

Advisr Data Republic MarketLend Search365
AgriDigital Do Claims Mclowd Selfmade
AirPay Financial Technologies Pty Ltd Elbaite Mega IT Services Pty Sniip Limited
Amber Labs Entersoft Security Moneycatcha Pty Ltd SocietyOne
Athena Home Loans Escientia MoneyPlace Startupbootcamp
BetaSmartz Ezypay Moneytech Payments stone & chalk
Beyond Merchant Capital Financial Mindfulness Moneytree Super Myway
BGL Corporate Solutions Pty Ltd Fintos Investment Multilateral SVX Group
BigFuture FlashFX myprosperity Tanggram Pty Ltd
Bit-e Financial Services FloodMapp NA Tappr
Blue Zebra Insurance frollo nCino Tekkon Technologies Pty Ltd
BrickX Geora Ltd Nelnet International Telescope Financial Services
Bromleigh Capital Goodments Novatti Trade Ledger
Centelon Pty Ltd Hip Money Pty Ltd OneCheck Urth.io
Certified By PL ID Exchange Pty Ltimited OnMarket Verrency
Choosemylifeinsurance.com IDS OurMoneyMarket Vix Technology
Cinch Insurance InfraRisk PayDock WordFlow
Claim Central Consolidated Instant Global Payments Paypa Plane XBRL Advance
Cloudfloat Integrity Life Practifi Xinja Bank
CoinJar Investfit Prospa Zuper
Credi InvoiceInterchange QuietGrowth
Crowd Property capital Joust Raiz Invest Limited
*Note – Fintech participants listed above specifically provided their permission to be cited in this report

EY | Assurance | Tax | Transactions | Advisory

Contact us
About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
EY deliver help build trust and confidence in the capital markets
and in economies the world over. We develop outstanding
Meredith Angwin Tim Coyne Rowan Macdonald
leaders who team to deliver on our promises to all of our
Partner Partner, Financial Services Partner, Financial Services stakeholders. In so doing, we play a critical role in building a
EY Australia EY Australia EY Australia better working world for our people, for our clients and for
our communities.
meredith.angwin@au.ey.com tim.coyne@au.ey.com rowan.macdonald@au.ey.com
EY refers to the global organisation, and may refer to one or
Government Incentives Open Banking Digital Transformation
more, of the member firms of Ernst & Young Global Limited,
Malia Forner Mike Booth Olivia Willee each of which is a separate legal entity. Ernst & Young
Partner, EY Australia Director, EY Australia Partner, EY Australia Global Limited, a UK company limited by guarantee, does not
provide services to clients. For more information about our
malia.forner@au.ey.com mike.booth@au.ey.com olivia.willee@au.ey.com organisation, please visit ey.com.
© 2019 Ernst & Young, Australia. All Rights Reserved.

Liability limited by a scheme approved under Professional
EY Sweeney Standards Legislation.
Marc L’Huillier Lewis Jones Hannah Stewart AUNZ00001151
Partner Associate Partner Manager ED None.
EY Australia EY Australia EY Australia This communication provides general information which is current at the
time of production. The information contained in this communication does
marc.lhuillier@au.ey.com lewis.jones@au.ey.com hannah.stewart@au.ey.com
not constitute advice and should not be relied on as such. Professional
advice should be sought prior to any action being taken in reliance on any
of the information. Ernst & Young disclaims all responsibility and liability
(including, without limitation, for any direct or indirect or consequential
FinTech Australia costs, loss or damage or loss of profits) arising from anything done or
omitted to be done by any party in reliance, whether wholly or partially,
on any of the information. Any party that relies on the information does
Alan Tsen Rebecca Schot-Guppy @ausfintech (twitter)
so at its own risk. The views expressed in this article are the views of the
Chair General Manager http://www.fintechaustralia.org.au author, not Ernst & Young. Liability limited by a scheme approved under
Professional Standards Legislation.
FinTech Australia FinTech Australia
ey.com.au
Alan@fintechaustralia.org.au Rebecca@fintechaustralia.org.au

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Financial Technology and Regulatory Technology

EY FinTech Australia Census 2019 | 1

08 About the research

09 The Australian fintech

EY FinTech Australia Census 2019 | 2

EY FinTech Australia Census 2019 | 3

45% 44% 41% Revenue decline

101% to 300% 2016 2017 2018 2019

21% 21% 15%

EY FinTech Australia Census 2019 | 4

Fast facts: The fintech landscape in Australia 2019

30% 18% 18% Sales 41%

EY FinTech Australia Census 2019 | 5

We hope you enjoy reading the Census report and learning

EY FinTech Australia Census 2019 | 7

Introduction About the research

About the research

FinTech Australia’s mission is: “We are here to build a

EY FinTech Australia Census 2019 | 8

Introduction About the research TheAustralian

EY FinTech Australia Census 2019 | 9

Introduction About the research TheAustralian

Fast facts: Sector profile 2019

Wealth and investment 30% 23% Retail consumers 44%

29% 32% 23% Accelerator/venture capital 5% 3% Government

EY FinTech Australia Census 2019 | 10

Introduction About the research TheAustralian

The Australian fintech landscape

As in previous years, our research has focused on a

EY FinTech Australia Census 2019 | 11

Introduction About the research TheAustralian

The Royal Commission Perceived impact of the Royal

► Willingness to partner (26%)

“Increased demand for regtech.”

“Transparency particularly in the advice business.”

EY FinTech Australia Census 2019 | 12

Introduction About the research TheAustralian

EY FinTech Australia Census 2019 | 13

Introduction About the research TheAustralian

More access and engagement (33%)

Base: All surveyed fintechs (120)

EY FinTech Australia Census 2019 | 14

Introduction About the research TheAustralian

Fintech Industry Voice: Relationship with incumbents

What’s improved What still needs to be addressed

Introduction About the research TheAustralian

Fintech Industry Voice: On collaboration

Fintechs say Major financial services incumbents say

Legacy mindset and technology/system Legacy mindset and technology/system

Awareness and adoption Awareness and adoption

Data protection/Consumer privacy Data protection/Consumer privacy

Introduction About the research TheAustralian

EY FinTech Australia Census 2019 | 17

Introduction About the research TheAustralian

EY FinTech Australia Census 2019 | 18

Introduction About the research The Australian fintech landscape Drivers of

EY FinTech Australia Census 2019 | 19

Introduction About the research The Australian fintech landscape Drivers of

5 drivers of fintech success

Around the world, fintechs have grown up and out –

spurring change across the entire financial services

capital, government initiatives and policy and

As the sector continues to grow and expand at pace,