The Global & Domestic FinTech Industry

In recent times, the FinTech industry has grown significantly across developed and emerging markets. Sydney has been named one of the seven FinTech hubs, alongside Hong Kong, Singapore, Germany, UK, New York and California. This is driven by projections on the potential for future expansion and growth.

The Asia-Pacific (APAC) region alongside North America holds the largest global market share at 40% each and is predicted to be the fastest growing over the next 3 years. In fact, Asia-Pacific with its rapidly growing middle class, may surpass North America within this demographic shift. It is projected that between 2010 and 2040, Asia’s middle class will grow by 180%. The impact of this figure is pertinent for FinTech as it facilitates an environment where individuals will demand higher rates of consumption in technology from digital payment usage through mobile phones to ecommerce and on-demand transportation.

Furthermore, the implications of COVID-19 may be fruitful for FinTechs as it provides a window of opportunity for further innovation to leverage digital technology in a time where restrictions and social distancing are enforced.

Furthermore, this is fuelled by its young-aged users identifying from the Gen Z and millennial users who grew up with technology as the norm. As digital natives, this demographic has high rates of success in the adoption of new and emerging technologies, and are open to alternative products and services from what their parental counterparts have used.

The Australian FinTech industry has seen exciting ventures and companies emerge as pioneers within the innovation space. Australian FinTechs are true innovators and leaders on the global stage - highlighted by Square’s AU$39bn acquisition of Melbourne’s Afterpay.

Australia’s stable regulatory environment in addition to its economic and political stability, in relation to partnerships with APAC nations form a lucrative avenue for product innovation and disruption. This has contributed to Australia being deemed as 6th place in the global FinTech rankings of 2021(1) - as reported by the Australian Trade and Investments Commission.

As of 2022, there were 775 active FinTech companies in Australia. The rate of FinTech adoption is 58%, which is over four times the estimated rate in 2015. Of this figure, 58% of companies were at its post-launch (post-revenue) stage despite 39% being less than 3 years old.

An important facet that fintechs fill is that they do not only take upon a B2C business model to service retail consumers but also help facilitate transactions in B2B for small to middle enterprises (SMEs) in order to improve their business operations.