Aaron Bunch Journalist with Australian Associated Press | Collection of published work | + 61 484 008 119 | abunch@aap.com.au

Aaron Bunch
Fintechs surge in startup sector

Fintechs are the fastest-growing kind of startup in Australia and many banking industry professionals are pursuing new ventures in the startup space.

November 21, 2017

Financial tech-innovators, or fintechs as they’ve become known, are dominating the Australian startup sector with Sydney their hub of choice, a new report shows.

And true to the nature of the startup industry, it is disruption in the traditional banking sector that is fuelling the growth of fintechs – as finance-savvy professionals exit the established institutions and put their skills to use in new ventures.

The 2017 Startup Muster Report, released on Wednesday, shows fintech startups were the fastest-growing type of business in the startup sector.

Fintech Australia chief executive officer Danielle Szetho says she isn’t surprised by result following recent moves by the federal government to open up the banking sector to new competition and digital innovation.

Ms Szetho says these changes have seen the industry evolve from “falling behind” to now taking a seat at the table as one of the globe’s top fintech markets.

“That’s because of the speed with which the government has basically moved to address the shortfalls in policy,” she said.

Ms Szetho said fintech-friendly initiatives such as the announcement at the May federal budget of an open banking regime to make consumers’ banking data available to new entrants, along with moves to support or challenger banks by Australian Prudential Regulation Authority (APRA), has created an environment ripe for the industry to flourish.

“That heatedness and that combined willingness to come together to create change has created an interesting opportunity for a lot of enterprising founders,” she said.

Ms Szetho said Australia already has a very sophisticated financial services market with a strong and deep financial service talent pool.

“And that talent pool is also starting to become disruptive,” she said.

While digital disruption was taking a toll on thousands of traditional financial workers, some were seeing an opportunity and using their skills and knowledge to build fintech businesses.

“The typical fintech entrepreneur is not your sneaker-wearing, hoodie-wearing 20-something-year-old, they are usually very experienced financial services professionals, somewhere in their mid-30s to mid-40s,” Ms Szetho said.

Many of those workers are also experienced in leading large teams and working within a regulatory framework.

The Startup Muster report found 44 per cent of all startups in Australia call Sydney home, with an even higher concentration of financial services businesses at about 54 per cent.

Startup Muster chief executive officer Monica Wulff says the rapid growth of fintech startup hubs, such as Stone and Chalk, and accelerator programs, coupled with the establishment of an industry body was behind the growth.

“Sixty-seven per cent of startups are B2B, they’re building products for the business community, that’s also why you’ll see a lot happening in fintech community,” Ms Wulff said.

Startup Muster defines a startup as an early stage business seeking to use technology to quickly capture part of a large addressable market.

The report surveyed 2,214 respondents, composed of 1,184 startup founders, 472 people who hoped to found a startup in the future and 739 businesses that could support startups.

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