More than 100 new businesses entered Australia’s thriving fintech sector in 2020 despite COVID posing several challenges for collaboration and capital raising in the industry.

Data from KPMG’s Fintech Landscape 2020 counted 733 Australian fintechs operating at the tail-end of 2020, up from 629 in the previous year.

A majority of the new businesses were blockchain or cryptocurrency-related, with lending and insurance technology (insurtech) also contributing to the sector’s sizable growth.

“Despite the impacts of COVID-19 on the economy, increased digitisation across financial services and new customer behaviours have created new opportunities for innovation,” KPMG’s National Fintech Lead for Australia Daniel Teper said. 

“The overall impressive net growth in the number of fintechs illustrates both the robust market dynamics and a strong support for the fintech sector in Australia” he further added.

Further evidence of the sector’s ongoing strength comes from EY’s FinTech Australia Census, which shows the industry’s revenue base, and pool of paying clients both continued to grow through the pandemic.

Digital payment providers performed particularly well after consumers were placed into lockdowns and forced to find new ways to make transactions.

Industry leaders call for further support

Although Australia’s fintech sector proved more than resilient through 2020, the industry is not without its challenges.

Fintech business leaders have cautioned incumbent financial institutions were less willing to collaborate with innovative fintech businesses throughout the pandemic, after redirecting staff and capital towards customer service initiatives at the height of the viral outbreak.

Only 17% of Australian fintechs reported an improvement in their relationship with existing institutions, representing a noticeable drop on the 42% recording in 2019.

At the same time, many fintechs raised concerns over the tightening of capital experienced through the year.

Nevertheless, the sector is optimistic that the sharp uptick in digital adoption witnessed in 2020 will pave the way for fintech companies to lead the post-COVID economic rebuild.

Sources:

• KPMG: More than 100 Australian fintechs added to the Fintech landscape
• EY: How Australian fintechs are planning to emerge stronger from the crisis