Investment in Australia’s fintech sector “smashed previous records” last year, jumping up to $2.9bn.
The KPMG data revealed a significant contribution to this figure came from the investment in neobank Judo.
“2019 was a break-out year for Australia’s fintech ecosystem, with large-scale mergers and acquisition activity driving the result alongside significant venture capital investment in emerging players,” said Dan Teper, KPMG head of fintech in Australia.
"There is a depth of innovation across multiple areas of fintechs, including banking and lending, proptech, insurtech and superannuation – and this is increasingly being recognised by investors and corporates.
“As we move forward, we would hope to build on the momentum of 2019, especially as Australia further develops its digital banking regime and open banking regulations.”
KPMG has predicted crossover between financial services and non-financial services groups in 2020, with "big techs" like Google to look for ways to integrate financial services into their offerings to their customers.
As such, there is a chance the "unbundling of financial services" seen over the past few years may start to reverse as fintechs and traditional financial institutions try to provide more value and a seamless experiences to their customers.
“2020 is going to be an exciting and pivotal year for fintech, particularly as we start to see the impact of the digital banking licensees in Australia, Hong Kong (SAR), and Singapore launching and endeavouring to scale, as well as other markets following suit,” said Ian Pollari, global co-leader of fintech for KPMG International.
“In addition, a number of companies from outside of financial services are working to get into parts of the financial services value chain – either directly or through partnerships – and they’re going to blur the lines of financial services even more. As a result, we expect to see bolder responses from incumbent financial institutions in terms of partnerships, as well as strategic investments and mergers and acquisitions.”
KPMG has also predicted fintechs and challenger banks will expand the breadth of their service offerings beyond their initial niche focus areas, as well as make “strategic moves across” international borders.