Sydney could challenge for APAC’s fintech capital
(4 August 2017 – Australia) Sydney is poised to overtake regional rivals Hong Kong and Singapore as Asia Pacific’s predominant fintech hub, new research from KPMG shows.
The report has found that Australia boasts 579 fintech companies, compared to less than a 100 three years prior.
According to KPMG, investment has remained strong, with US$675 million (A$847 million) invested across 25 deals last year, and Sydney has been the major recipient of fintech venture capital investment at US$171 million between 2014 and 2016.
The report found that regulatory challenges continue to hinder innovation, while it may also create a divide between those firms who can circumnavigate or bypass red tape, and those who cannot.
“Internationally, Sydney’s financial services sector has been benchmarked and is rising,” said Tim Williams, chief executive of the KPMG committee for Sydney.
“Apart from its sheer quantum — Sydney’s financial services sector creates 9 percent of national GDP and is bigger in scale than the financial services sector in either Hong Kong or Singapore. A key element in its emerging global reputation is the speedy progress we have made in fintech in Sydney.”
The research says although London is seen as the clear global leader, there is an opportunity for Sydney to become the fintech hub of Asia.
Trends specific to fintech in Australia were an increasing demand for faster, more convenient and accessible finance and payment services for things like buying a home.
Ian Pollari, KPMG Australia’s head of banking sector, Sydney, said the findings highlighted the substantial growth that the fintech sector had seen in Australia over the past three years, as reflected in the number of fintechs and the investment they attracted.
“The challenge now is to see the more mature players scale their businesses, locally and internationally,”
Pollari said. “The report also highlights the active nature of many Australian financial institutions in proactively responding to the threats and opportunities of digital disruption.”
In 2016, East & Partners Treasury Fintech Index found that corporate treasurers in the UK, Asia and Australia were increasing investment into fintech firms.
In the UK, treasurers were forecasting a 14.5 percent increase in their fintech spend for the coming year, while Australia and Singapore are following closely behind with a planned 12.2 percent increase.
In Australia, 17.6 percent of corporate treasurers reported having directly invested in fintechs, while 24.2 percent said they are looking at opportunities for investment in the fintech space.
East & Partners Australia head of markets analysis Martin Smith said at the time that the research shows a "two-pronged approach" which will increase innovation.
"The research confirms not only are corporate treasurers targets for fintech innovation, but they are directly embedding themselves in the strategic direction of fintech firms themselves by providing direct investment and funding," he said.
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