Why Fintech is Good for You

Fintech is quite the buzzword these days, but it translates to cheaper money, Fastest Caveat Loans in the Market !!!

Nathan Daly
February 8, 2022

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Fintech is quite the buzzword these days, but with so much overwhelming information out there and rapid changes in technologies, regulations and government policy, it may not be clear to you that it is the right –– or even an available –– choice to meet your needs for commercial lending in Australia.  

Our exemplary team at Acumen of experienced and early fintech engagers are available to discuss the right lending strategies for you. Becoming involved in this scene was a good call for us to make: the evidence is overwhelming –– it is here to stay. It’s also a good thing for you if you are looking for private lending solutions for your current or upcoming projects.  

How Fintech Has Changed Banking and Lending

The abbreviation of financial technology refers to any technology that works within or innovates the financial sector. In terms of project funding, it has revolutionised the lending industry by opening up new avenues of capital, notably outside of the traditional banking sector, from P2P lending (Peer to Peer lending) to cryptocurrencies, such as bitcoin. Innovations such as these ultimately disrupt and challenge the classic financial landscape, spurring it on to become more accessible and dynamic.  

Initially, the banks may have resisted it, but the success of fintech has meant that ultimately to survive, banks in Australia have had to adopt elements of it. If you can’t beat them, join them! In turn, this has allowed the technology to develop further as it becomes firmly integrated into the structures of the financial landscape. Each year it is supported and encouraged by substantial cash injections from investors, including venture capitalists and private equity investment.

This changing global lending scene, which includes all fintech private lending options, is in robust health. It is anticipated to acquire a $312.6 billion USD transaction value this year, and continue to grow by 17% year-on-year. This is fantastic news if you are looking for any form of personal or project financing, but particularly if you are an SME (small or medium-sized enterprise), like approximately 99% of Australian businesses. Business P2P lending dominates the market, and it is forecast that by 2023 SMEs can expect to receive $290.1 billion USD in loans.    

Fintech in Australia

The current reports, statistics and recent government announcements are all in agreement when it comes to Australia’s fintech future. A recent KPMG report states that in 2019 global investment in the sector attracted $135.7 billion USD, and Australia succeeded in generating a $1.913 billion USD share of that pie. To give further context that was a 252% increase for Australia, making it one of the major global fintech success stories last year! Furthermore, some of Australia’s most significant investments were in private lending.  

In terms of it being a serious competitor to the traditional banking sector, since 2015, the Australian fintech sector will have taken an estimated $10 billion AUD in aggregated revenues away from the major banks by the end of this year. So, although we may hail it as a significant disruptor to conventional lending (which is a good thing!), we can see that its financing solutions are not a fleeting trend or a means of funding reserved only for risk-takers. It is becoming an increasingly established and normalised part of our financial ecosystem. A census of fintechs in Australia, conducted by market research firm EY Sweeney, supports this, showing that post-revenue growth is continuing to increase, and the sector’s profitability is on the rise.

There is even more potential for businesses to benefit from fintech in Australia: $16 billion AUD worth of potential according to research presented by Andrew Johnson, the CEO of ACS, the professional association that represents Australia’s ICT sector, to a Government committee on fintech and Regtech (regulatory technology). Here’s hoping the government follows through on his advice and acts to support businesses here in Australia and boost our position as a global competitor.        

What Can We Expect From Fintech Next?

In many ways, the evolution of fintech will bring more of the same: efficient financing options that continue to disrupt and challenge the traditional banking sector. All of this indicates enormous economic potential and growth for Australia, already evident by the increase in P2P lending for small and medium businesses.

There have also been several recent government policies indicative of their support in nurturing a thriving fintech ecosystem in Australia. In February, they issued a report outlining the significance of blockchain to bolster the Australian economy, which aligns with the fact that blockchain and cryptocurrencies are garnering increasing interestin this space.  

The government has also recently passed a law adapting their current fintech regulatory policy, to give financial startups greater freedom to develop and test their services. This is not just great for those working in the sector, but for those looking to its solutions to meet their individual or commercial lending needs in Australia. Overall it indicates that there will be an increased amount of fintech-related finance available, as well as more accessibility to it.  

Regtech and Fintech often go hand in hand, so there will be significant developments here too. Regtech has evolved alongside it to aid with compliance and ultimately help to safeguard financial transactions and data. The Regtech space is also maturing, as it turns towards using predictive data to improve regulation, which will help to mitigate any associated risks.

Our fintech expertise here at Acumen puts us at the forefront of commercial lending in Australia. As we work across all three tiers of financing, we have more options available to you than the traditional banking sector. Get in touch so we can discuss what funding may be available to you.