Australia’s fintech industry has continued to grow through COVID-19, but headwinds loom for many fledgling companies.
EY’s Fintech Australia Census 2020 found that 39 per cent of local fintechs now have more than 500 paying customers, up from 27 per cent in 2019, while 88 per cent are planning overseas expansions in the future.
“Fintechs by definition are agile organisations, so they have been able to respond quickly to the COVID-19 crisis and make the most of the new opportunities it has presented,” said Meredith Angwin, EY fintech adviser.
“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. At the same time, the buy now pay later sector has expanded at pace, both here and overseas.”
However, some 72 per cent of fintechs say that COVID-19 has negatively impacted their ability to raise capital, while 39 per cent reported not meeting their capital raising expectations.
“It’s not all smooth sailing,” Ms Angwin said.
“While the industry continues to face its usual headwinds of regulatory concerns and competitive pressure, it is now also 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.”
However, fintechs continue to grow in a number of key areas, including number of employees (an average of 10 full-time and two part-time), while 78 per cent of fintechs are now post-revenue.