It’s astonishing to consider how far the fintech industry has come in just four years.
Back when FinTech Australia was founded in 2016, the sector didn’t really have a voice. Despite having very different policy and strategic needs to many other emerging companies, it was lumped in with the rest of the startup industry. Financial services policy was set with only the large industry players and the protection consumers in mind.
Fintechs were, for all intents and purposes, invisible to policymakers.
Now, there are active conversations in Canberra about a fintech-led COVID-19 economy. Policy is being discussed with a competition mindset, which ultimately benefits consumers and the market.
There are a lot of milestones along the way that led to this outcome: the Haynes Royal Commission into Banking and Financial Services and the protracted launch of open banking, to name a couple.
But perhaps the biggest change, the one that really drove home this idea that Australia is a world leader in fintech, is the track record of our largest startups.
AfterPay and Zip are now household names. Airwallex and Judo Bank are well respected among the business community too. Larger more established fintechs from abroad, such as Transferwise and Revolut began choosing Australia as their launchpad for the Oceania region. The efforts of the industry as a whole cemented its position as a force for change and growth in Australia.
Which brings us to today, and COVID-19.
While I agree with sentiments that our economic recovery from this pandemic will be led by the fintech industry, I think it’s success to date has seen many overestimate how robust it is.
Behind the big names of the sector are myriad smaller players — many of whom could grow to become unicorns over the next few years — and they are hurting. Projections and all prospects of growth have been cut, as many are put into survival mode.
This is why we are running and asking all fintech founders to fill in an abridged version of the FinTech Census this year. As while we anecdotally know this is the case, the numbers will help confirm our approximations.
My fear is that without government intervention in the form of expedited R&D tax payments, VC-matched government lending and low-interest loans for disruptors, the bulk of the industry — who will create the jobs we are looking for in an economic recovery — may not see the other end of this virus.
There is no denying that old adage: adversity breeds innovation.
When musing about COVID-19, many reflect on the fact that Uber, Airbnb and other major startup companies emerged out of the ashes of the GFC 10 years ago. I think our fintech industry is capable of the very same feat.
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But COVID-19 is a very different situation to the GFC. The typical rules of business still applied during that recession, offering some level of certainty. That’s gone this time around. Government support is really acting as a baseline of assurance that founders can build on.
Should fintechs get the support they need, I think we will see them lead the charge in driving economic growth. It’s also a golden opportunity to position fintech as a major international export for Australia. Our sector is already world-regarded, and investment in this space would further consolidate this avenue of growth.
I’m also heartened that the rise of the digital economy is being explored at a cabinet-level as an avenue for future growth. For us, that’s a sign that our politicians are taking the findings and testimony given at the Senate Inquiry into FinTech and RegTech seriously as many local fintechs will power the digital economy.
With more coronavirus stories emerging daily, and an ongoing second wave, there is a lot for our officials to manage right now. But we cannot make the mistake of prioritising short-term wins over long-term, long-lasting benefits. Not when Australia’s future prosperity depends on it.