2021 a tipping point; FinTech entering a new era, says Frost

2021 a tipping point; FinTech entering a new era, says Frost

As we enter the final quarter of 2021, and emerge from various lockdowns in NSW and Victoria, what is the state of fintech in Australia?

According to Glen Frost, Founder of the FinTech Awards and the FinTech Summit, 2021 will be written up as a tipping point for fintech, with 2022 set for ‘extreme growth’.

“There are 5 key trends that emerged this year, and collectively these show that fintech reached a tipping point in 2021, and is set for a ‘new era’ of growth for 2022 and beyond,” said Frost.

“The tipping point can be measured in financial metrics just as much as psychological sentiment,” added Frost.

The key trends driving the tipping point for 2021 have been and are:

  1. Acquisitions boomed in 2021: Three examples here demonstrate both the international attraction of Australian fintechs with established brands and booming customer numbers, as well as local players keen to buy into the advanced technology developed by Australian fintechs; US NASDAQ listed Square’s acquisition of ASX listed Afterpay (Nick Molnar, Co-Founder of Afterpay, called Square “the perfect partner”), ASX listed Bendigo & Adelaide Bank acquisition of Ferocia (Up App), and ASX listed National Australia Bank buys neo-bank 86:400.
  2. FinTech-Bank Partnerships: Afterpay and Westpac: Afterpay is the first partner on Westpac’s new digital bank-as-a-service platform which allows Westpac to work with leading companies to offer innovative banking services. Athena and Newcastle Permanent Building Society: Athena has written $1.6 billion in home loans and secured a $300m funding facility with NPBS, Tic:Toc & Bendigo & Adelaide Bank: Fintech lender Tic:Toc secured $25 billion of additional funding for the next seven years after extending a partnership with Bendigo and Adelaide Bank.
  3. Investor Funding Boom: three examples here are Australian home loan fintech Athena Home Loans raised $90 million in May 2021 entirely from local backers; Judo Bank raising $174 million, giving Judo a cumulative funding total of $1.2 billion. Volt Bank raised $33 million. Covid and lockdowns have impacted some fintech/neo-bank valuations, and the Seed/Angel stage fintechs have been hit hard by not being able to meet potential new investors face to face, but fintechs like Athena and Judo Bank with established investors and a proven track record have seen valuations rocket.
  4. New legislation boosting fintech: 2021 saw the role out of new fintech services from the CDR legislation delivered two years ago; FinTech and Banks are now trialling Open Banking services, many of which will come on stream in 2022.
  5. Emerging trend is Embedded Finance: especially non-finance brands that will white label fintech products, or create the financial services themselves – example – Woolworths spun out “WPay” – ASX listed Woolworths launched Wpay to offer its payments platform as a service – this will mean WPay will offer new services directly to retail or with partners. Embedded finance is a huge growth area that started in 2021 and will boom in 2022; “I expect automotive (finance for cars, trucks, motorbikes), home improvement and travel to lead the way with embedded finance,” said Frost.

These trends will be covered by the 8th Annual FinTech Summit 2021: www.fintechsummit.com.au