2020 was the year that no one expected. Words became action as the global pandemic made digitalisation a critical priority for businesses of every shape and size. The same can be said for incumbent financial institutions, and most importantly, for consumers.
The changes we have seen this year will not likely stop when COVID-19 wanes. Around the world, people and businesses recognise the importance of agility and responsiveness. Companies across the financials services spectrum now understand what is at stake if they do not embrace digital innovation.
The KPMG Fintech Landscape 2020 showed an increase in the number of fintechs active in Australia, with 733 fintechs recorded – up from 629 at the end of 2019. Correspondingly, investment in Australia’s fintech sector recorded US$1.4 billion in 2020, the second highest total on record. Fintech companies in Australia continued to see strong interest from investors, particularly in areas like payments, business lending and instalment finance (Buy Now Pay Later), which has seen substantial growth in the local market with leading Australian players AfterPay and Zip continuing their expansion offshore (US, UK, Canada, etc).
Australia had a very strong Q4’20 that included the $577 million acquisition of B2B payments company eNett by US-based WEX, a $209 million funding round by new Judo Bank and an $84 million raise by solar power financing company Brighte.
H2’20 also saw Australia-based investment platform STAX complete the first crypto-backed IPO for West Coast Aquaculture.
The Australian fintech market is incredibly vibrant and it’s gaining a lot of traction from investors both locally and on the global stage. Funding rounds are getting larger, fintech valuations are growing, and we’re beginning to see some strong exits.
Growing participation by corporates looking to enhance their digital offerings.
Ecosystem platforms looking to provide financial services products as part of their offerings.
Increasing investments in banking-as-a-service models, insurtech and wealthtech.
Strengthening interest in ESG management platforms and solutions from a regtech perspective.
VC investment in fintech more than doubles in second half of 2020 – expected to remain strong into 2021.
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To learn more about the analysis and topics raised in this edition, or to discuss your organisation's unique fintech agenda and roadmap, please contact your local KPMG advisors or the contributors in this publication.