The Fintech sector’s median revenue has tripled but gender imbalance persists, EY report finds

Fintech

Median revenue in Australia’s fintech sector has jumped by 208% over the 12 months to June 2017, with one in four companies (24%) enjoying a revenue boost of at least 700%, the 2017 EY FinTech Australia Census reveals.

According to EY, the Census, which is based on survey results from 166 fintech companies, is “the only comprehensive industry-backed analysis of the Australian fintech industry”. It builds on another research report, the 2017 EY FinTech Adoption Index, which in June 2017 found that Australia has leap-frogged Hong Kong, Singapore and the US to have among the best fintech market penetration in the world – specifically, 37% of Australia’s digitally active population are now fintech users, compared to 13% in 2015.

Other key findings from the latest report include:

  • Revenue increases were particularly pronounced among companies less than three years old.
  • Overseas expansion is a 12-month priority for 54% of companies, up from 38% in the 2016 census, with the main targets for expansion being the UK (49%), Singapore (40%), the US (38%), New Zealand (27%), Hong Kong (22%) and Canada (22%).
  • Improvements to the research and development initiative (87% support), government mandated open data controls (85%), capital gains tax relief (85%), reduced payroll and other taxes (83%) and more transparent access to the New Payments Platform (82%) are industry growth initiatives with the most support from fintechs.
  • There has been little change in overall gender diversity, with the proportion of female fintech employees moving only slightly from 22% in 2016 to 24% in 2017.
  • Fintechs are still having trouble collaborating with banks and other financial institutions, with 40% citing this as an external impediment to their business (in 2016 the figure was roughly the same at 41%)
  • As the fintech industry matures, and customer acquisition and growth becomes a priority, fintechs are reporting increasing talent pool shortages in sales and marketing, with engineering talent still remaining a challenge.

FinTech Australia Chair Simon Cant said the Census results illustrated that Australia’s fintech industry was increasingly becoming the first choice of financial services for many Australians.

“The fact that the industry has experienced a tripling in median revenue is a strong sign that fintech firms are acquiring customers and making strong inroads into the traditional financial services sector,” he said.

“Equally so, it is exciting to see that fintech firms are now sufficiently comfortable with their domestic positions to be increasingly planning international expansions. This is another sign of a healthy and maturing industry.”

“In saying this, there is a vast amount of work we need to continue to undertake to remove some of the barriers to our industry’s growth. This includes growing and diversifying our talent pool and driving ongoing policy and regulatory reforms.”

Stuart Stoyan, the Census Founder and Deputy Chair of finch startup advocacy group Fintech Australia, said the Census provided a strong evidence base to help FinTech Australia to advocate for policy and regulatory change. He added, “It’s become clear from this year’s Census that taxation reform, specifically around providing better access to research and development incentives and capital gains tax relief, and a mandated open financial data platform are key policy priorities for fintech firms around the country.”

Stoyan said that FinTech Australia had been, and would continue to, drive increased female participation in the industry.

“Our programs have included a speaker gender equality target at the Intersekt Festival, ensuring at least 30% of the FinTech Australia board are women and by promoting a Female FinTech Leader of the Year award at our annual Finnies awards,” he said.

Relevantly, the top three recommendations from Census participants for improving female participation were to:

  • Encourage women to follow STEM career paths;
  • Adjust recruiting practices/hire more women; and
  • Change company culture/company policy to accommodate more women in the workplace.

EY FinTech advisor Meredith Angwin said the latest Census results reflected some of the significant advancements made by the Australian fintech sector over the past twelve months.

“With the 2016 Census, we saw a snapshot of a sector that, while growing, was still in its relative infancy,” Angwin said.

“This year’s results though show that Australian fintech has really started to come of age, with substantial increases in the proportion of fintechs that are now post revenue as well as those that are planning international expansion.

“Coupled with an impressive average year on year revenue growth, there have clearly been some great strides made in the last year. But there is still more work to be done if the sector is to reach its full potential.”

A fact sheet on the Census findings is available here.

The full Census can be found here.