Australia’s Thriving Fintech Sector Creates Jobs, Attracts Record Funding

Australia’s Thriving Fintech Sector Creates Jobs, Attracts Record Funding

by December 22, 2021

Australia’s fintech industry is thriving, creating thousands of new positions, attracting record investment and turning on revenue streams quickly. These players are now expanding globally, turning to markets including the UK, the US, Singapore, Canada and Indonesia, according to the new EY Fintech Australia Census 2021.

Produced in collaboration with industry trade group Fintech Australia, and co-funded by the Australian Trade and Investment Commission (Austrade), the report gives an overview of the Australian fintech sector, looking at emerging trends.

According to the research, Australia’s fintech sector has considerably grown over the past year as investors continued pouring large sums into local ventures.

KPMG estimates that Australian fintech investment hit US$890 million in H1 2021, up 60% from US$557.2 million in H1 2020, with rounds that included challenger bank Judo Bank’s A$124 million (US$89 million) round in June, and mortgage fintech company Athena Home Loans’ A$90 million (US$64 million) investment in May.

The momentum continued in H2 2021 with deals such as payment startup Till Payments’ A$110 million (US$79 million) Series C, and personal finance and price comparison platform Finder’s A$30 million (US$21.5 million) round.

The EY study found that the venture capital (VC) ecosystem has improved with 82% of the 145 fintechs surveyed in Australia for the research indicating that their capital raising expectations were met or exceeded. In comparison, the figure stood at only 57% in 2020.

Revenue growth and international ambitions

Investors are pouring capital into Australia fintech companies amid strong revenue growth. This year’s survey found that 88% of Australian fintech firms three years or older and 81% of fintech companies two years or older have begun to generate sales, or are now post-revenue. As a result, the number of paying customers has reached a new high among post-revenue Australia fintech companies, with 41% reporting more than 500 customers.

Results also show that Australian fintech companies are aggressively expanding internationally. 72% of respondents said they plan on entering or expanding into an overseas market within three years. 60% plan to do so in the next 12 months.

Whether in the next three years or 12 months, the top markets for expansion were found to be New Zealand, the UK, the US, Singapore, Canada and Indonesia.

Infographic via EY Fintech Australia Census 2021

Infographic via EY Fintech Australia Census 2021

This trend is evidenced by the numerous announcements that have been made over the past year.

Publicly traded buy now, pay later (BNPL) firm Zip has embarked on an expansion spree, multiplying acquisition deals in locations including Europe, the Middle East and India to gain a foothold. Zip is also actively looking at Southeast Asia, in particular Singapore, Malaysia, Thailand and the Philippines.

Commodity digitization and registry service Trovio, formerly known as InfiniGold, opened a new office in Singapore earlier this year after raising A$6.25 million. The company plans to use as a launchpad into the rest of Southeast Asia.

And digital lender Bizcap launched in New Zealand a few months ago after reportedly enjoying a 300% year-on-year (YoY) growth during the global pandemic.

Fintech hiring increases

To meet increased demand for digital financial services and support their growth, Australian fintech companies are hiring extensively.

The EY survey found that this year, the sector continued to create new jobs despite the pandemic, with a median of 21 full-time employees, up from just 10 full-time employees in 2020. 67% of Australian fintech companies indicated having more than 10 employees, compared to 59% in 2020.

Despite the dynamic employment market, fintech companies are struggling to find talent. In particular, border closures are significantly impacting Australia’s skilled migration levels and creating challenges for many organizations in the fintech sector.

66% of Australian fintech companies indicated finding it more difficult to attract qualified or suitable talent in Australia in the past 18 months. Respondents cited engineering /software talent (62%) as the most difficult to attract, followed by product management (31%) and data engineering/data science (30%) talent.

Tech talent shortage is not a new phenomenon in Australia but it has certainly exacerbated with the COVID-19 pandemic. A 2021 research by recruitment firm Hays found that out of nearly 3,500 polled, 68% of the local tech industry indicated suffering from skills shortages. This is alongside other sectors including banking, mining and human resources.

The Technology Council of Australia (TCA) aims for Australia to become a leading digital economy and achieve one million tech sector jobs by 2025. This means that 286,000 workers will need to join the sector over the next four years.