By Guglielmo de Stefano on Friday 15 April 2016
Fintech market growth to add AU$1bn in value to Australian economy by 2020.
Global research and consulting firm Frost & Sullivan has published new research on the state of the Australian FinTech industry, focusing on the impact of its growth on the Australian economy in the five-year period 2015-2020. The study – entitled“Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020″– forecasts that the Australian Fintech Sector will expand at a compounded average growth rate (CAGR) of 76.36% and will reach AU$4.2bn by 2020, of which AU$1bn will be completely new value added to the Australian economy.
Frost & Sullivan reports that the total market size of the Australian Fintech sector in 2015 was at AU$247.2m and anticipates a sharp growth rate in 2016 and 2017, followed by steady increases through to 2020. Investments in the space totalled AU$438m last year and were mainly concentrated in a number of innovation hubs in Sydney, such as the Tyro Fintech Hub and the Stone and Chalk Fintech Hub.
Audrey William, Head of Research, ICT Practice, Frost & Sullivan Australia & New Zealand, described the investment environment for Australian financial technology firms:
"The investment environment for Fintech companies is incentivised with aggressive low taxing and generous investment tax exemptions. The Australian Federal Government has extended a 20% tax offset for early stage investments up to a total investment value of $200,000, and capital gains tax exemptions for direct and indirect investments held for at least three years. […]”
The study determines that a wealthy 18-34 demographic is driving consumer demand for FinTech products – the so-called Millennials. Young people seem to be attracted by the wide array of new products – new payment methods, financial and investment services, short-term credit tools – that are not provided by the “Big Four”, the four largest banks in the country by market share.
Saranga Sudarshan, Research Analyst, ICT Practice, Frost & Sullivan Australia & New Zealand, offered a number of forecasts for several segments of the Fintech space:
"Growing consumer confidence and popularity of new Fintech products will see steady revenue growth in digital payments. In Personal and Business Finance, the share of revenue to mobile oriented personal finance solutions will expand as consumers become more comfortable with peer-to-peer lending, micro-investing and mobile based book-keeping. Financial Infrastructure and Data Analysis will increase in revenues, but become more concentrated as the share of revenues to vendor and enterprise oriented solutions offered by the Financial Infrastructure and Data Analysis segment slowly increases. However, these revenues will decrease as a share of the entire Fintech sector revenues."