Will Fintech Growth Continue in 2020?
Fintech is one of the most rapidly expanding industries on the planet and a global darling for international Venture Capital (VC) investments.
Will Fintech Growth Continue in 2020?
Fintech is one of the most rapidly expanding industries on the planet and a global darling for international Venture Capital (VC) investments. Worldwide funding topped an unbelievable $112 billion USD in 2018, and although investments slowed in 2019 to $24.6 billion USD through Q3, this trailblazing industry will continue to rise in concert with surging mobile penetration and advancing technologies in blockchain, big data and AI. These trends are encouraging pioneering startups to charge into the financial market and upset business as usual with the sector set to capture $10 billion USD in revenue from existing financial institutions in 2020. Australia has created a particularly attractive environment for the flourishing of fintech with tax breaks and blockchain integration; in addition, Sydney is a major incubator for startups. Fintech in Australia is stealing the spotlight from traditional finance in three principal markets: digital payments, personal and business finance, and financial infrastructure and data analysis. At Acumen Finance, we are ready to accommodate consumers and business owners with innovative solutions in private and commercial lending.
The Right Atmosphere
Australia’s fintech ecosystem has the key components necessary for a thriving fintech market where new players can emerge, and opportunities for VC investments are abundant. One of the main reasons for this encouraging atmosphere is the Australian government’s positive startup policies and push toward aligning the country with open banking and blockchain technology. They have increased investments in fintech, lowered taxes for startups, created a regulatory sandbox to support fintech growth, and passed legislation for crowd-sourced equity funding with the cooperation of the Australian Securities and Investments Commission (ASIC). These policies allow for changes, testing, and the necessary funding in the early stages of startup development. Nationwide, another driving force in fintech growth is the continued market transformation generationally, with a higher percentage of millennial and Generation Z consumers who want integrated and fluid online private lending and banking solutions. Sydney is the countries creative hub; where an abundant digital native workforce fosters original startup ideas and networking. In fact, the Global Financial Centres Index lists Sydney in the top 10 of the world’s premier financial centres, with Melbourne also making it into the top 20. Sydney’s position and its displacement of cities like San Francisco and Toronto mirror the global shift as the Asia Pacific region continues to gain ground against the West.
Digital Technology Drives Growth
Behind the growth of Fintech in Australia are powerful digital tools that are integral to this sector's toolbox. The passing of the Consumer Data Right (CDR) Bill in 2019 was the first step toward an open banking market for Australia, allowing its citizens access to their consumer, account and transaction data for the first time in history. Open banking and open data are landmark initiatives that promote transparency and competition in the financial industry; providing consumers access to the best deals in banking and private and commercial lending. Blockchain technology is also generating fintech growth as it lowers the costs of financial ledgers and removes bias from human lending arrangements. Australia is embracing the technology with a progressive national blockchain strategy and roadmap plus additional funding from the government. The Commonwealth Scientific and Industrial Research Organisation (CSIRO), an organisation focused on research which progresses industries, will continue to make blockchain a priority as the nation seeks to have one of the top tech sectors in the world.
Thriving Fintech Continues to Renovate the Industry
FinTech in Australia may see a slowdown in early 2020, but overall will keep expanding market share and deepening consumer adoption. Major successes like Airwallex’s $100 million USD in funding and the Prospa IPO launch could be the beginning of a unicorn and IPO trend as fintech expands. Airwallex’s deal has made the company the third tech unicorn in Australia and Judo Bank, a challenger SME bank, also had an unprecedented fundraiser bringing in $400 million USD after securing its authorised deposit-taking institution (ADI) licence. In the global ranking Fintech 100, Australia has three in the top 50 with Airwallex, Judo Bank and Afterpay. With successful native businesses like these, Australia finds itself listed as 8th in the top fintech ecosystems in the world in the Global Fintech Index City Rankings 2020.
As more consumers move to digital banking and nontraditional private lending, P2P lending and commercial mortgages, fintech in Australia will keep making things safer and more accessible while increasing competition in the marketplace. Acumen Finance is here to assist with consumer, SME and large enterprise commercial and private lending needs through our seamless online loan facilitation platform. Contact us to find the most efficient and secure lending solution for your personal endeavour.