Australian fintech companies made a strong showing in the 2019 Fintech 100, announced recently by Fintech Innovators, a collaboration between fintech investment firm H2 Ventures and KPMG Fintech.
Seven Australian fintechs were selected among the world’s leading players, with cross-border payment provider Airwallex the highest ranked Australian firm at #32 on the Top 50 Established firms, having risen from #49 in 2018. It’s followed by challenger bank Judo Bank at #33 and online payment service AfterPay Touch at #47.
On the Top 50 Emerging firms list, Australian fintechs included mortgage provider Athena Home Loans, voice analysis engine daisee, disaster response provider Sempo and smart receipts app Slyp.
As in 2018, payments and transaction companies dominated the list, representing 27 of the ranked firms. On a positive note, wealth companies (19) and insurance companies (17) have both continued to rise in prominence this year. Four of the seven Australian companies ranked are payments companies.
The Asia-Pacific region also dominated for another year, with Ant Financial (China) coming in first place for the second year running, followed by Grab (Singapore) and JD Digits (China). China has dominated the Fintech100 for the past three years and this year is no different with three Chinese fintechs in the Top10.
What does this mean for Australian fintechs?
Ian Pollari, KPMG Australia’s National Sector Leader, Banking, and Global Co-leader for KPMG Fintech practice said: “Australia’s fintech ecosystem continues to perform well – with established players like Airwallex and AfterPay expanding globally and SME challenger, Judo raising substantial capital. We are also seeing a continued pipeline of new fintech innovators being launched in Australia – with all four of our local emerging list founded in 2017.”
“Globally, we have seen a rise in companies from across the Asia Pacific (including China) which represent the top 6, and 7 of the top 10 fintech companies in 2019 with China again securing the most top ten positions. In 2019 we have also seen the emergence of India as a fintech force taking out 2 top 10 positions and with 8 companies on this year’s list in total,” he added.
Toby Heap, Founding Partner, H2 Ventures commented: “This year’s Fintech100 reveals a significant increase in venture capital backing of fintech companies. The companies on the 2019 List have raised over US$70B in venture capital (a 35% increase on last year’s figure) and over US$18B of capital in the past 12 months.”
“We have also seen a drop in the number of payments and lending companies making the Fintech100. They have been replaced by a surge in the number of wealth, insurance and multi-sector companies.”
Australian fintechs are also benefitting from being at the forefront of several key trends identified:
Flow of capital
The Fintech100 companies in this year’s list have raised over US$18B in the last twelve months. 32 companies on the Fintech100 have raised at least US$100M in the last twelve months alone and the average capital raised by the top 10 companies in the past 12 months is over US$1.25B. Significant Venture investors in Fintech companies include Sequoia Capital and SoftBank, together with strategic investors such as Alphabet (Google’s Holding Company), BBVA and Tencent Holdings.
South East Asia is the latest hot spot
There are more Asia Pacific based companies on the 2019 fintech100 than from any other region. Of the 11 companies that have raised over $1B in the past 3 years, 8 are from the Asia Pacific serving customers in China, India and rapidly emerging markets in South East Asia such as Indonesia, Vietnam and Thailand. The smart money is rapidly flowing to fintechs focused on this region.
An increasing number of fintechs are rapidly globalising across multiple jurisdictions, with examples including Australia’s AfterPay Touch.
Monoline to mainstream
Early fintech innovators with monoline product propositions are now diversifying to fulfil a greater set of mainstream customer needs. Australia’s favourable regulatory developments, such as the Restricted ADI License, are facilitating greater levels of competition and customer choice.
Almost every company on this year’s list is a beneficiary of a global policy shift to putting customers in control of their data, including Australia’s Open Banking and Customer Data Right legislation, which is driving competition and allowing fintechs to access customer banking data to create faster, more personalised and innovative services.
Which Australian companies were named on the 2019 Fintech 100 list?
Australian Fintech100 2019 Top 50 Established Firms:
Airwallex (32) – founded in 2015, Airwallex facilitates cross-border transactions by offering secure payments facilities that allow customers to fix exchange rates for each transaction to reduce currency volatility.
Judo Bank (33) – founded in 2017, Judo Bank is a new SME challenger bank built to make it easier for Aussie businesses to get funding service.
AfterPay Touch (47) – founded in 2014, AfterPay provides instalment plans for online shopping users with an option to spread purchases across four equal instalments. The company estimates that it now processes more than 10% of all physical online retailing in Australia. AfterPay went public in 2016.
Australian firms on the Fintech100 2019 Top 50 Emerging Firms list:
Athena Home Loans – founded in 2017, Athena has re-invented the model for home loans in Australia, creating customer efficiencies with technology. Its investors include Macquarie Bank, Square Peg, Hostplus, Rice Warner, Apex Capital, RESIMAC Group and Airtree Ventures.
daisee – founded in 2017, daisee has developed a proprietary semantic engine that interprets meaning in conversations between businesses and their customers. It’s privately owned, with Alium Capital among notable investors.
Sempo – founded in 2017, Sempo is a platform for rapidly and efficiently getting cash-aid to people affected by humanitarian crises. Its investors including Startmate, Blackbird Ventures, dLab, and SOSV.
Slyp – founded in 2017, Slyp enables customers to pay with their bank card and automatically receive an itemised tax receipt inside their banking app, freeing retailers and customers from paper receipts. Slyp’s Investors include ANZ, NAB, Westpac Ventures (Reinventure) and Scentre Group (Westfield).
Fintech100 2019 Top 10:
1. Ant Financial (China) is the world’s largest third-party payments platform.
2. Grab (Singapore) uses data and technology to improve everything from transportation to payments across a region of more than 620 million people.
3. JD Digits (China) is a digital technology company, dedicated to providing digital, online and offline all-scenario services around three key points – data, user and connectivity, using emerging technologies such as big data, AI, cloud computing, blockchain and IoT.
4. GoJek (Indonesia) a multi-services platform with more than 20 services including Gopay, Gobills, Gopoints, Paylater, and Gopulsa serving millions of users in Southeast Asia.
5. One97 Communications (India) is the largest digital payments company in India with more than 380 million registered users and 12 million merchants on-board its Paytm platform.
6. Du Xiaoman Financial (China) provides short-term loan and investment services.
7. Compass (United States) is a real estate technology company with a powerful end-to-end platform that supports the entire buying and selling workflow.
8. Ola (India) off the back of its ridesharing userbase Ola Money is making payments easier and simpler.
9. Opendoor (United States) makes it possible to receive an offer on a home in just a few clicks, and sell in a matter of days, removing the headaches, uncertainties, and risks from the transaction.
10. Oaknorth (United Kingdom) specialises in small-and-medium-enterprise lending using its proprietary data and technology platform.
Selecting the Fintech 100
The Fintech 100 were selected following extensive global research and analysis based on data relating to five factors. These selection criteria are the key metrics used to calculate the rankings of companies in the Fintech100 list because of the emphasis that venture capitalists place on the ability of firms to generate a long term sustainable competitive advantage.
1. Total capital raised
2. Rate of capital raising
3. Geographic diversity
4. Sectorial diversity
5. X-factor: degree of product, service and business model innovation (a subjective measure that is applied only with respect to companies appearing on the 50 Emerging Stars list).