The three biggest parts of the market are balance sheet lending, peer-to-peer lending and invoice trading.
Australia’s alternative finance industry has topped US$1bn for the first time, driven by the “diverse” nature of the market.
The digital finance revenues jumped by 88 per cent in 2017 to US$1.15bn in Australia, placing it just ahead of South Korea in the Asia Pacific region, which rocketed three times to US$1.13bn over the same period.
These findings are part of KPMG’s 3rd Asia Pacific Alternative Finance Industry Report, released by the accountants in December.
KPMG partner Ian Pollari said: “The Australian alternative finance market has now grown to over US$1B, capturing 32 per cent of the Asia Pacific market share, excluding China, and becoming the second largest market in Asia Pacific. Having grown by 88 per cent against the previous year, the Australian industry is highly diverse and leads the region in terms of product innovation and research and development.”
Pollari will discuss whether partnerships between Australian fintechs and banks are maturing at the AltFi Australasia Summit next month.
The largest three elements of Australia’s mixed alternative finance market consist of balance sheet business lending worth US$574m, peer-to-peer consumer lending accounting for US$256m, and invoice trading coming in at US$142.7m.
Some industry executives say the release of the Royal Commission on banking by High Court Judge Kenneth Hayne, which details a cut-throat sales culture at the expense of consumers at many of Australia’s biggest banks, will provide a further opportunity for the alternative finance industry.
Mark Jones, chief executive of peer-to-peer lending firm SocietyOne, said: “We’ve noticed an uptick in the number of consumers willing to consider banking alternatives in the aftermath of the Royal Commission, which has been a strong contributor to our own growing lending volume. Trust is critically important in financial services, and we believe the fintech industry is growing so strongly because of its focus on delivering a better, and more transparent, outcome for the customer.”
Jones speaks on a panel about what the Royal Commission’s findings mean for consumers and small businesses at the AltFi Australasia Summit, at Sydney's Dolthouse on 15 April.