Challenges remain for Australia’s burgeoning fintech sector

Attracting and retaining staff from Australia continues to be at least somewhat of a challenge according to 85 per cent of respondents. Fintechs said the top three challenges or inhibitors to attracting and retaining talent are rising employee wages (66 percent), access to skilled domestic workers (58 percent) and competition from big tech (52 percent).

Challenges in attracting and retaining talent are of course not unique to fintechs. It is a problem across many industries and geographies globally, with the wider technology sector particularly affected. The fintech sector has an opportunity to expand its talent pool by better addressing diversity, equality and inclusion (DE&I) and also consider new avenues, such as a skills pipeline to help transfer, retain and attract talent to and within Australia.

Confidence falls on international expansion plans

The proportion of Census respondents who believe Australian fintechs are internationally competitive fell from 80 per cent in 2021 to 69 per cent this year, putting the sector’s confidence almost back to 2019 levels. Confidence that Australian fintechs can win against international fintechs also fell to 57 per cent, from 67 per cent in 2021.

This local perception contrasts with anecdotal evidence from overseas investors and fintechs, who view Australia’s fintech sector and market opportunities as highly attractive and competitive.

The Census data also shows that the percentage of Australian fintechs generating revenue from overseas remains stable (at 40 per cent). Of these, 43 percent earn almost half of their income from sales abroad.

For fintechs planning overseas expansion over the next three years, the US, UK and New Zealand remain the three most attractive markets. Singapore is in fourth position and Canada has now consolidated its fifth position on the list of fintechs starting to see greater opportunities there.

The way forward

It is clear that fintech is here to stay, and the sector has an important role to play in unlocking innovation-driven value from the economy. But collaboration across the entire fintech ecosystem will be necessary to keep the sector on its growth path.

Authorities and regulators have a role to play as a multiplier, including through opening up access to existing grants and targeted incentives for investors and business, designed in consultation with industry.

In the meantime, fintechs themselves can also strengthen the sector’s resilience to the market challenges ahead by focusing on greater collaboration and partnership both within and outside the sector, investing in the ecosystem, opening up the talent pool by considering different and alternative employment strategies and strengthening their ESG capabilities. .

May Lam is EY Oceania fintech leader and EY Asia-Pacific payments leader. Malia Forner is the EY Oceania start-up and entrepreneurship leader.