A short presentation on the Australian fintech ecosystem, written for the fintech startup looking to enter the Australian market. Packed full of insights into the market and what you should be looking out for when planning your entry strategy.
Alan Tsen • Angel investor and consultant • Deputy chair of Fintech Australia • Member of ASIC's Digital Finance Advisory Panel • Former GM of Fintech Victoria • Former GM Stone & Chalk, Melbourne • Former member of the Australian Treasurer's Fintech Advisory Panel Twitter: @alantsen 2 The Australian Fintech Landscape
Market Structure And Dynamics • Highly concentrated across all significant verticals in financial services, with the big 4 banks dominating. • Well banked country with most people having multiple accounts ("People rarely close accounts, they just open another one"). • Australia has one of the fastest growing fintech adoption rates globally (EY Fintech Adoption Index). • Other: High smart phone penetration, ubiquitous internet coverage etc. 5 The Australian Fintech Landscape
Regulatory Environment • Well calibrated and clear. But, don't confuse this with fast! • Importantly, there is strong government interest in making Australia a more fintech friendly jurisdiction - eg. Sandbox regime, RADI and Consumer Data Right (CDR). • The ecosystem is now dense enough that many types of fintech products have been seen by regulators. 6 The Australian Fintech Landscape
Vibrant And Growing Ecosystem • More investment and rising interest in Aussie fintech startups. • Some breakout success stories: Afterpay, Zip, AirWallex. • In terms of verticals: Payments (30%), lending (29%), infrastructure (22%) and wealth (18%). • In terms of customers, B2B dominates (80%) 8 The Australian Fintech Landscape
The Market Is Shifting, Fast • All the usual global fintech trends also at play in Australia. • Consumer Data Right: first step in building a data economy. • Financial Services Royal Commission: trust erosion. • Regulatory changes: Enhanced regulatory sandbox, RADI, fintech bridge(s) • "Everything is fintech" (just not yet in Australia) • Growing desire by incumbents to partner, because they know... 11 The Australian Fintech Landscape
Practically, What Does This Mean? ! Partnering • Incumbents are coming around (at different speeds) to partnering. • Partnerships, FSIs as customers & FSIs as channel partner can all work. • Slightly accelerated by current climate. ! Challenging • Lots of lazy incumbents but they are deeply entrenched. • Orthogonal attacks can work (eg. BNPL). • Growing opportunities in embedded fintech. 13 The Australian Fintech Landscape
Common Pressure Points • Regulatory speed • It can be slow. This is now a well-trodden path, so plenty of tribal knowledge out there. • Banking relationships (3x what you're planning) • Painfully slow and for the most part and time-consuming. • Infrastructure • Still not easy to do all the things - e.g. not many BaaS/aggregators in market (yet). • Recruitment • Lots of talent. But still hard to find experienced startup operators. • Network & community • Important in any market. An investment that shouldn't be underestimated. 15 The Australian Fintech Landscape
Emergent Opportunities • Embedded fintech and generally infrastructure. • Challenger banking - no winners (yet). • CDR as the global standard for open data. • Fintech adjacent opportunities (eg. proptech and regtech). 17 The Australian Fintech Landscape
Our Thoughts On... Drop into the chat the verticals you'd like to hear our thoughts on. We'll start with... • Challenger Banks (Consumer & SME) • BNPL • Superannuation (Similar to 401k) • Infrastructure (BaaS, Payments, etc) 18 The Australian Fintech Landscape
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