The Australian fintech industry has proven resilient in the face of COVID-19, sustaining its revenue base, attracting more customers and planning for future expansion around the globe, according to the fifth annual EY FinTech Australia Census 2020.
Meredith Angwin, fintech advisor for Ernst & Young Australia, explained that fintechs have been able to respond quickly to the crisis, with many groups able to actually capitalise on the new opportunities presented, given that fintechs are inherently agile organisations.
“As people have adjusted to new ways of working and living during the pandemic, we have seen a significant increase in consumers’ use of digital payments and transactions,” Angwin said.
“At the same time, the buy now pay later sector has expanded at pace, both here and overseas. This is reflected in a change in the top fintech categories identified in this year’s census, with payments, wallets and supply chain (30%) now in the top spot, followed by lending (20%).”
However, access to capital has emerged as a particular challenge which remains for the fintech industry.
“The industry…is contending with added difficulties emerging from the pandemic, such as the tightening of capital and concerns that consumers may return to the perceived safety of major incumbent institutions for their financial services needs in uncertain times,” Angwin explained.
Nearly three-quarters (72%) of fintech respondents reported the COVID-19 pandemic has worsened their capital raising situation.
The census also revealed fintechs remain positive about open banking’s potential impact, despite the fact significant work remains to be done and the initial consumer uptake since the new system’s 1 July 2020 launch has been as slow as was expected.
Nearly 50% of fintechs surveyed plan to become CDR accredited. Of these, three in ten (31%) intend to become an accredited data recipient (ADR) within the next six months and 71% within the next 12 months.
“Many fintechs see the potential benefits of being part of the CDR, such as greater transparency, increased customer engagement and increased volume and speed of data exchange,” said Angwin.
“However, they also reported that they would like to see some streamlining of the complex and costly accreditation process, with a tiered system so those with scale can support smaller players.
“The ability to access the scheme via a third-party intermediary was also viewed by many as a necessary step to support small and medium-sized fintechs participation in the system.”