Rapid growth in Australian fintech sector demonstrates market opportunity: Visa report
While 40% of Australian fintech startups recorded no revenue in the past 12 months, 81% see their market potential to be well in excess of $100 million1, an ambitious goal fintechs estimate to reach in 8.4 years
Australian fintech startups are ushering in a new era of financial services, but to unlock their full potential will require greater funding, partnerships and industry expertise, according to a new report from Visa, the global payments technology company.
Australia’s Fintech Future examines insights from 245 Australian fintech startups surveyed by Startup Muster between 2016 and 2018, exploring the demographics, skillsets and attitudes within this subset of Australia’s startup sector.
In 2019, a Visa market scan identified 526 fintechs in Australia, up from 382 in the previous year – rapid growth that highlights both the market opportunity and a continuing commitment from established financial providers to partner with fintechs and help them succeed, says Visa’s Head of Innovation and Partnerships for Australia, New Zealand and South Pacific, Anthony Jones.
“Australia is among the world-leaders in our adoption of digital payments, yet the market opportunity for digitally-minded entrepreneurs remains significant. One example is the small business ecosystem where credit and debit cards are used for approximately three percent of business expenses2. Globally, $17 trillion in consumer payments still made in cash or cheques3 and 1.7 billon people operate outside the formal financial sector4.
“As the levelling of the financial services playing field continues, particularly with the introduction of open data, we believe we’ll see greater momentum in cross-industry collaboration that ultimately benefits Australian consumers.”
Australian fintechs at a glance
- The average Australian fintech startup has six full time employees, just above the average for all startups at 5.6 employees.
- Of the founders surveyed, 86% are male and 14% female and they are varied in age, with the youngest being 19 years old and the oldest 65 years old.
- The most common skills of founders are general business operations (66%), software development (63%) and strategy (52%), and when asked who they want to hire, respondents said they are seeking software developers (60%), marketers (38%) and sales/business development professionals (38%).
- Identifying a compelling opportunity (53%) and solving a problem (46%) were the biggest motivations for founding a fintech.
The financial reality of fintechs
- In the past 12 months, 40% of fintech startups recorded no revenue, 31% reached $100,000 and only 10% achieved $1 million or more.
- In the next 12 months, 63% will undertake capital raising in Australia, 61% expand sales inside Australia and 42.3% expand sales abroad.
- To aid their growth, 66% rely on cash contributions, 40% on private Australian equity, and 36% rely on family and friends.
Murray Hurps, CEO of Startup Muster said,” Startups are an important piece of the innovation puzzle, because of the blank canvas they’re able to use to create a fresh solution. Having watched the growth of Australia’s fintech industry, there is a huge opportunity for established business to promote, support and fund these companies.”
Fintech startups believe media exposure (43%) corporate customers (37%) and mentorship (32%) would be most valuable to them over the next six months.
In 1958, Visa pioneered the digitisation of money, becoming the world’s first fintech. Since then, the company has supported and enabled fintechs in Australia and abroad. Visa recently launched Visa Partner, a portal providing fintechs with unprecedented access to its technologies, network and solutions, enabling them to scale and bring new payments solutions to life with speed and security.
“Fintechs are increasingly important to the global economy and as they take their first or next step, Visa is committed to helping them navigate the payments landscape and collaborating to create the future of commerce,” added Mr Jones.
1 Total addressable market, Future of Fintech, Visa, Startup Muster (p.12)
2 Visa calculation using PCE reported by ceicdata.com and commercial card volume reported by RBA.
3 Visa Annual Report (December 2018)
4 Global Findex Database (2017)
About the report
Australia’s Fintech Future examines insights from 245 fintechs surveyed by Startup Muster between 2016 and 2018, exploring demographics, skillsets and attitudes. Three-quarters (76%) of the companies surveyed were less than five years old.
Click here to download a copy of the Australia’s Fintech Future report.
About Visa Inc.
Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit About Visa, https://usa.visa.com/visa-everywhere/blog.html and @VisaNews.