2017 EY FinTech Australia Census key findings

This fact sheet summarises some of the key findings from the 2017 EY FinTech Australia Census

The fintech industry is maturing, with firms experiencing exceptionally strong revenue growth and the average age of fintech companies increasing

  • This year’s Census includes a new question exploring year on year revenue growth.
  • It finds that, across the Census respondents, growth in monthly revenue was 208 per cent between June 2016 to June 2017.
  • In dollar terms, this is an increase in median revenue across the industry from $30,000 to $95,000 a month.
  • It also finds that a quarter of all fintechs (24%) have reported annual revenue growth more than eight times (or 700%) year on year (although many of these are likely to be growing from a small revenue base).
  • A further 14% of fintechs have seen revenue growth 301-700% the previous year.
  • Overall, the number of pre-revenue fintechs has dropped from 43% to 29%. The number of post-revenue fintechs (on which the revenue figures above are calculated) has increased from 57% to 71%.
  • The number of fintech companies aged one year or less has fallen from 36% to 21%.
  • There are a healthy number of repeat founders in the industry, with the average fintech founder or CEO having started 2.1 companies and 36% of founders or CEOs having started more than three companies.

Taxation reform, open data and New Payments Platform dominate the fintech industry priorities

  • Improving the research and development initiative (87% support), government mandated open data controls (85%), capital gains tax relief (85%), reduced payroll and other taxes (83%) and more transparent access to the New Payments Platform (82%) top the list of the industry growth initiatives voted as most effective by fintechs.
  • Support for open data controls has increased from 76% to 85%, with a big jump in fintechs who thought this would be “very effective” from 42% to 51%. It is now the second highest fintech priority (last year it was the 5th highest priority).
  • Census respondents were only asked about the New Payments Platform (NPP) for the first time this year. Its high showing on the priorities list shows that fintechs are very keen to easily access this infrastructure.
  • The NPP is being delivered by 13 banks and financial institutions and when live in early 2018 will allow near real-time payments.

Australian fintechs are finally ready to go global

  • There’s been a big spike in the number of companies nominating they are going to expand overseas (or expand their existing overseas operations) in the next 12 months.
  • This preference has increased from 38% in the 2016 census to 54% in the 2017 census.
  • This year’s Census includes a more fine-grain country-by-country analysis of preferred relocation locations, compared to the 2016 Census which looked at world regions (with the exception of New Zealand).
  • The 2017 Census finds that the main targets for expansion are the UK (49%), Singapore (40%), United States (38%), New Zealand (27%) and Hong Kong and Canada (22%).
  • In terms of fintechs with an existing office overseas, the US (18% of respondents) and UK (17%) are the two most popular locations
  • Singapore (9%), NZ (8%) and Hong Kong (7%) round out the list.
  • At the same time, some 48% of fintechs said they would consider relocating (as distinct to expanding) their company overseas. This is slightly down from 53% in 2016. This could be a welcome sign that fintech companies are now looking more closely at expansion, rather than relocating completely out of Australia.
  • The main reason for relocation is “greater opportunities for expansion”, followed by “better access to capital”.

The talent shortage problem for engineering remains but the focus now has also shifted towards sales and marketing

  • As the fintech industry matures, and customer acquisition and growth becomes a priority, sales and marketing professionals are increasingly in high demand.
  • The number of respondents reporting a talent pool shortage with sales professionals has increased from 35% to 41%. Meanwhile, 29% of respondents cited a talent pool shortage with marketing professionals, up from 24% in 2016.
  • 61% of respondents nominated a talent pool shortage in engineering and software staff (slightly down from 76% last year).
  • 24% of respondents reported a talent shortage in design and user experience professionals. This is significantly down from 42% last year.
  • Overall, 52% of respondents agreed there was a lack of available startup and fintech talent in Australia, slightly down from 58% last year.

Unfortunately, there has been little progress on female workforce participation

  • The proportion of female employees in fintech firms has moved increased only slightly from 22% in 2016 to 24% in 2017.
  • The top three recommendations from Census participants to improve female participation were to:
    • Encourage women to follow STEM career paths
    • Adjust recruiting practices/hire more women
    • Change company culture/company policy to accommodate more women in the workplace

As the industry matures, there is some evidence that funding is tightening

  • The number of fintechs citing “a lack of funding” as an external impediment to growth has increased from 20% in 2016 to 25% in 2017.
  • The number of fintechs which met expectations with their capital raise dropped to 39% in 2017, compared to 46% in 2016.
  • This comes as more fintechs are looking for commercial funding, rather than private funding. 57% of fintechs reported their company was funded by commercial (rather than private) funding in 2017, up from 48% in 2016.

Collaboration with banks and other financial institutions has not improved

  • Fintechs are still having trouble collaborating with banks and financial institutions. 41% cited this as an external impediment to their business in 2016, this figure has stayed stable at 40% in 2017.
  • In a separate and new question, only 17% of fintechs agreed that Australia’s incumbent banks, super funds and insurance companies are engaging well with the fintech industry industry in Australia.