Rapid growth in paytech will support accelerated industry convergence, especially now banks are facing increased competition from huge, experienced omni-channel players and other non-financial entrants with large customer bases, including retailers, telcos and utilities.
Ubiquitous payments will enable industry convergence. As it grows, paytech has a duty to support financial inclusion, equity and sustainability while helping to rebuild the economy.
Fintech growth was also assisted by the 2020 Australian Federal Budget which brought welcome developments to the Australian research and development tax incentive (RDTI) program, removing much of the lingering uncertainty around the future of the program and abandoning the previously proposed cuts. Certainty was also strengthened by landmark court cases around how the RDTI legislation should be interpreted and new guidance material.
Continuing to grow
Fintechs and technological innovation will be vital to help rebuild Australia’s economy. To sustain the improving maturity metrics recorded by the Fintech Census, all key pillars (government, regulators, institutions, investors and educators) must continue working collaboratively to foster onshore growth and enable greater international expansion.
In terms of government contribution, 80 per cent of survey respondents say making the RDTI more accessible helps improve sustainability and growth of their business. However, despite improved certainty around the RDTI, more than two-thirds (68 per cent) of fintechs still perceive the Australian Government to be less supportive compared with other jurisdictions.
Notably, New Zealand, which has recently doubled down on its R&D incentives, has jumped to the top of the list of fintech markets for expansion for the first time ever. Increased scrutiny on RDTI claims and high-profile court cases where claims were challenged have left some fintech founders rattled.
Time to build on strong foundations
Australia’s fintech industry is vital to support economic and jobs growth. Sustaining our world-class financial services ecosystem is an opportunity and challenge Australia must win – and we have a great foundation.
The fintech market is enjoying increased capital availability from a more sophisticated venture and private investor community. The sector’s speed to commercialisation and the number of deals and initial public offerings (IPO) in the past 12 months – including the landmark Afterpay sale to Square – have given investors greater confidence of returns.
Now Australia needs to sustain the sector’s growth trajectory with a concerted effort between government, regulators, incumbents, private business and educators. To retain relevance and rising star status on the global fintech stage and keep our innovation and talent onshore, we must build meaningful and globally competitive growth pathways for Australia’s start-up sector.
Incentives, stimulus and cash grants to sustain and attract investment, better-coordinated collaboration and strong moves to drive industry diversity will all help to build a world-class fintech export market and attract the best international tech companies to Australia.
May Lam is EY Oceania Fintech Leader and Asia-Pacific Payments Leader, EY Financial Services
This article was originally published by EY and Fintech Australia