EY Fintech Census

A powerful platform for FinTech Australia when engaging with members, stakeholders, commercial partners, regulators and government departments

FinTech Australia has continued its successful collaboration with EY Australia to deliver this important piece of research. The Census remains the only detailed, industry-backed analysis of the Australian fintech industry, offering fine-grain detail about the industry’s increased maturity.

The eighth EY FinTech Australia Census finds more fintechs post-revenue than ever before, but challenges emerge for new entrants. A massive 88% of fintech respondents reported that they are post-revenue – the highest proportion recorded since the Census’ inception – and 43% are now turning a profit, compared with 30% last year. However, these positive findings are slightly tempered by the fact that the Census found significantly fewer younger companies in the fintech ecosystem. Just 3% are one year or younger, compared with 10% in 2022, suggesting that start-ups may be facing significantly higher barriers to entry than they were 12 months ago.

In brief

  • After a decade of being a focused government priority, Australia’s fintech sector is demonstrating growing maturity and record-breaking success.

  • But limited local capital, complex regulatory hurdles and overseas direct investment strategies are tempting success stories to focus their efforts offshore.

  • Modern digital regulation and reinforced support for start-ups would allow Australia to establish itself as a home to fintechs of the future.

Critical Actions to Consider:

  • Matching global best practice on incentive models – Australia has good incentives at the incubation stage. But more local start-ups would succeed at commercialisation if they received greater support at the growth stage. The government could encourage capital flows to the sector by making tax incentives to investors who acquire shares directly from fintech start-ups globally competitive. For example, in the UK’s Seed Enterprise Investment Scheme, investors can receive up to 50% of their investment value in qualifying early-stage companies, usually in the form of income tax relief, offering a route to vital funding in the early stages by minimising the risk to investors. This compares with Australia’s non-refundable 10% carry forward under the Early Stage Venture Capital Limited Partnership (ESVCLP) tax offset. Also, in Australia, the law has not kept pace with the evolving definition of financial technology, especially where it converges with mainstream financial services businesses. Providing enhancements and certainty on early state innovation company incentives, ESVCLP and VCLP programs could make them globally competitive. This would attract investment not only into Australian fintechs but also to other emerging sectors of the economy.

  • Exploring new investment models – Innovative venture capital-style funding models, as pioneered by Breakthrough Victoria’s Investment Fund or Launch Vic's Alice Andersen Startup Fund, exemplify the art of the possible for innovation in alternative funding and incentives beyond venture capital or traditional forms of finance to drive investment in research, innovation and commercialisation. Such models are also creating markets and consumers for new and established financial services enterprises with alternative and non-dilutive financial services solutions.

  • Prioritising digital skills in both the current and future workforce – Australia has a mismatch between the skills people have and the current and future skills the nation needs. Business leaders, governments and educational institutions must work together to upskill people to meet the workforce needs of the future, including digital skills in AI, machine learning and cybersecurity.

  • Continuing to modernise regulation and reduce regulation uncertainty – In a world of rapid digital transformation, the government’s prioritisation of forward-looking, transformational and structural reforms is crucial to supporting economic dynamism and ensuring Australia’s regulatory frameworks keep pace with overseas jurisdictions and new products and services. Ongoing reform processes to improve and streamline regulation for payments service providers and access to skilled talent through immigration reform are positive Australian examples. Existing initiatives, such as the Enhanced Regulatory Sandbox, FinTech Bridges and the ASIC Innovation Hub, could empower the next stage of growth in Australia’s financial and, consequently, non-financial sectors too, making the market more adaptive, efficient and navigable for consumers and regulated fintechs.

  • Sustaining support for trade and investment – In a sign that trade and investment programs are successful at accelerating fintechs to go global, three-quarters (75%) of fintechs say that programs to access overseas Government Landing Pads, including in Germany, India, Singapore, the UK and the US, would be highly beneficial to grow and promote the Australian industry. In a sign of Australian trade and investment program success, half of Australian fintechs surveyed (50%) are now generating revenue overseas, up from 40% in 2022. Meanwhile, 75% of fintechs agree that accelerators and incubators are an important contributor to the success of the fintech industry in Australia.