Alternative finance booming in Australia

by Julia Corderoy22 Mar 2016
Australia’s alternative finance lending market is the third largest in Asia Pacific after experiencing growth of 320% in 2015.

According to a new survey, Harnessing Potential, Asia Pacific Alternative Finance Benchmarking Report, Australia’s alternative finance lending market ballooned to US$348 million in 2015. Australia was trailing China, which reported US$101.69 billion over the same period, and Japan, which reported US$360 million. 

“While still a relatively new concept for many, online alternative finance has experiencing rapid growth globally since 2013, and in Asia has already become a multi-billion dollar market,” Ian Pollari, global co-lead for KPMG’s fintech practice said. KPMG collaborated with the Cambridge Centre for Alternative Finance, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School to conduct the research. 

“Activity in China dwarfs much of the region, but Australia is punching above its weight, creating niche markets and capitalising on the sophistication and financial muscle of its established financial services sector.”

The largest share of Australia’s alternative finance market volume was balance sheet business lending, which accounted for over US$120 million in 2015. This was followed by invoice trading (US$105 million) and marketplace/P2P consumer lending (US$43m) in 2015.

Marketplace or P2P business lending volume reached $7.05 million in 2015.

“In a relative context, Australia leads in Asia in areas such as balance sheet business lending and invoice trading, where Alt-Fi platforms have been able to attract institutional participation and funding. The substantial growth provides a glimpse into the potential for fintech to the economy,” Pollari said.

“Furthermore, collaboration between financial organisations and fintech start-ups will create more opportunities for Australian businesses to gain access to affordable finance.”

However, Pollari says Australia needs to catch up in regards to regulation to keep this momentum going.

“While it is very encouraging to see the Australian government and regulators prioritising fintech and alternative finance, it is clear that more work needs to be done to further enhance our policy and regulatory settings if Australia is to retain and enhance its position as a leading Asian and global market.”