Australian FinTech companies have reached a collective tipping point and are on the verge of enjoying mainstream adoption, a new report has found.
The EY FinTech Adoption Index 2017 saw the number of Australians using financial technology services more than double from 2015, with the country boasting the fifth highest FinTech market penetration in the world.
Federal treasurer Scott Morrison hailed the report, saying the increased use of FinTech startups is good for Australia as a whole.
“FinTech adoption is good for the economy and good for Australian consumers. It also helps reduce tax avoidance and criminal activity, which levels the playing field for everyone,” Mr Morrison said.
According to the report, Australia is now above the likes of Singapore, Hong Kong and the US, with 37 percent of the digitally active population being FinTech users, compared with 13 percent in 2015.
In the last three years, the number of Australians who said they preferred to use traditional financial services providers dropped from 23 percent to 10 percent.
The index is based on 22,000 online interviews completed across the world, and ranks the top 20 countries in terms of FinTech adoption. China came out well on top with 69 percent, followed by India, the UK and Brazil.
“FinTech firms have reached a tipping point and are poised for mainstream adoption,” the report said.
While Australia’s fifth place of 20 in total seems impressive, it’s only marginally above the average score of 33 percent adoption, and well behind the first placed China.
FinTech Australia president Simon Cant said Australia’s ranking is proof the industry is thriving and will help to attract capital to the sector.
“FinTech is no longer just an industry with future potential – it is now an industry which is delivering great on-the-ground outcomes and becoming the first choice for financial services for many Australians,” Mr Cant said.
“We hope that this index result attracts the attention of domestic and international FinTech investors as it underscores the opportunity for investors in this market to back FinTechs that can rapidly attract material market share.
But the co-founder of Clover, a robo-advisor startup, Darcy Naunton said that while FinTech ecosystem in Australia is growing rapidly, there’s a lot still to be done before it is a major market.
“We need to keep in mind that FinTech is nascent in Australia and that the FinTech ecosystem is still relatively fluid in terms of the FinTech startups, the large incumbents and the regulatory landscape,” Mr Naunton said.
Mr Morrison also used the report as validation for the government’s recent policies centred on the FinTech space.
“These results shows the Turnbull government’s plan to make Australia a global FinTech centre is working. It will drive better outcomes for customers and businesses, making financial services cheaper, providing new and easier ways to obtain financing, faster services and more options,” he said.
FinTech has been perhaps the only stable facet of the government’s innovation policy since Malcolm Turnbull took over the top job, mainly due to it falling under the Treasury umbrella rather than in the innovation portfolio’s revolving door.
The government has announced a number of new policies focused on the space, including establishing a FinTech Advisory Group, launching the regulatory sandbox, controversially introducing equity crowdfunding and introducing a number of tax incentives.
Mr Morrison has previously labelled the growth of FinTech a “paradigm shift” for business and government.