Many of this year’s findings are some of the strongest the Census has ever seen in terms of the progress made by Australia’s vibrant fintech sector. This Census also underscores the evolution of the sector. Fintech is now essential to financial institutions, small businesses, the digital economy and Australian consumers alike. These innovative and disruptive companies are embracing new business models and technology to help improve financial services accessibility and literacy, better meet consumer expectations and solve other financial services challenges.
Among multiple innovative use cases, new fintech models are facilitating renters to access the housing market, changing how and when workers access their pay, managing and measuring diversity, equity and inclusion, improving money management and education, helping financial institutions to deliver new digital consumer services and even using banking data to track individual carbon footprints.
This is what a mature, innovative and successful fintech sector looks like.
Of the companies completing the 2023 Census, 90% have now been in business for three years or more, compared with 75% in 2022. The most common types of Australian fintech continue to be: payments, wallets and supply chain; lending; data analytics/information management/big data; business tools; and wealth and investment – the same top five as in 2022.
A massive 88% of our Census participants report that they are post-revenue – the highest proportion recorded since the study’s inception, up from 78% in 2022. The Census reveals 43% of fintech companies are now turning a profit, compared with 30% in the previous year. Not surprisingly, business valuations are continuing to travel in the right direction. The proportion of fintechs valued at more than $1b increased in the last 12 months, at 13% compared with 7% in 2022.
Interestingly, after increasing year-on-year since 2019, the number of paying customers among post-revenue fintechs has fallen over the last year. Thirty-five per cent of fintechs report more than 500 customers, compared with 45% last year. Given the uptick in profitability against an increasingly competitive and challenging consumer environment, qualitative research shows that mature fintechs are doubling down on marque accounts, enhancing pricing and services, and streamlining staffing models to improve profitability and revenue, how customers are served, and the efficiency of interactions, transactions and inclusiveness.