• US$37.9 billion in total global investment (VC, PE & M&A) in first half of 2019 across 962 deals.
• US$101.1 million total investment activity (VC, PE and M&A) in fintech in Australia.

Open banking and open data continue to be front and centre for incumbent and challenger banks alike. Australia’s Parliament has passed the Consumer Data Right (CDR) Bill, marking the start of Open Banking and the first step towards an open data future for the country. As well as finance and banking, legislation will expand in the near future to encompass energy retailers, telecommunications companies and superannuation funds.

Australia and China are zoning in on regtech, with ASIC (Australian Securities and Investments Commission) funding studies to investigate how natural language processing could help detect misconduct and improve regulation and the China Securities Regulatory Commission pushing for the adoption of regtech to help strengthen controls over fintech usage.

Blockchain is expected to gain more attention from fintech investors in China, particularly in microfinancing. The Australian Digital Currency Association recently held its first "Blockies" awards for blockchain innovators. There has also been a trend toward multiple financial services organisations working together to reimagine global trade and to rewire industries using blockchain solutions to make them more efficient. This will be a key area to watch as it could see some significant investments and partnerships over time.

Facebook’s announcement of a new cryptocurrency, Libra, put cryptocurrencies back into the spotlight. A number of global companies have bought into Libra; in addition to Facebook, Visa, Mastercard, PayPal, eBay, Stripe, Mercado Libre, the Creative Destruction Lab, and others have combined to form the Libra Association. According to Ross Buckley, KPMG Law-KWM professor of disruptive innovation, UNSW Sydney, Libra has massive potential to disrupt banking in Australia, due to Australia’s high remittance costs to the Pacific. One Australian university has recently announced a cryptocurrency PhD program.

Digital banks continued to draw significant venture capital interest during H1'19. So far this year Australian regulators have issued three banking licences to Australian neobanks Judo, Volt and 86 400, and Xinja expects its full licence soon. The first international neobank, UK-based Revolut, has also announced a beta version of its app in Australia. A number of other overseas digital banks are also focused on international expansion.

“The adoption of open banking globally is emerging as a driver of fintech investment, along with the opportunities presented by technologies like AI, machine learning and data analytics,” says Ian Pollari, National Sector Lead, Banking and Global Co-Leader of KPMG Fintech Practice. “We’re seeing the growth of sub-sectors like wealthtech and proptech, in addition to increasing participation from the big tech companies looking to leverage the deep customer information they have to expand their reach into financial services.”

Ashford Pritchard
0411 020 680
apritchard2@kpmg.com.au

The Financial Services industry is transforming with the emergence of innovative new products, channels and business models. This wave of change is driven by evolving customer expectations, digitalisation, as well as continued regulatory and cost pressures. We are passionate about supporting clients to successfully navigate this transformation, mitigating the threats and capitalising on the opportunities. KPMG Global Fintech comprises professionals in over 45 fintech hubs around the world, working closely with financial institutions and fintech companies, to help them understand the signals of change, identify the growth opportunities and to develop and execute on their strategic plans.