FinTech Australia calls for refreshed eyes on funding

FinTech Australia has called for the federal government to review its policy settings in response to the tricky fintech capital raising environment. 

The peak advocacy body for Australian fintech put forward six recommendations for the government’s consideration regarding priorities for the 2024–25 budget.

FinTech Australian said in its submission [pdf] that with “right support, fintech can provide the foundations for Australia’s digital economy and continue to be a driver of growth and productivity in Australia.”

Main concerns under the endorsements include continued fintech trade and investment support, providing targeted support for initiatives to promote the Consumer Data Right (CDR) and ensuring ASIC is adequately resourced to deal with licensing influx. 

The organisation also called for an expansion of the $15 billion National Reconstruction Fund (NRF) with initiatives to more clearly capture fintech businesses, address the challenging funding environment for fintechs and review the Enhanced Regulatory Sandbox (ERS). 

FinTech Australia CEO Rehan D’Almeida said, “While we understand the core focus of this budget is cost of living measures, our recommendations are at supporting Australia’s next round of prosperity and job creation.”

“Fintech has a key role to play in not only improving the financial literacy and prosperity of Australians but also in our transition to a green economy. 

D’Almeida added that “maintaining the industry’s momentum is crucial in ensuring we see the most benefit from it as an agent of job creation and change.”

“While we will continue to work with the Federal Government on various regulatory issues such as the CDR and ERS, our priority is on issues affecting the entire sector. Namely capital raising and trade opportunities,” D’Almeida said.

According to the CEO, the latest State of Australian Startup Funding Report reported a 53 percent year-on-year decline in startup funding.

“The fintech industry has been particularly affected, with startup funding down to $331 million in 2023 from $2 billion in 2022 and $3 billion in 2021.”

D’Almeida said this means Australia is seeing “far fewer young businesses and new innovative ideas coming through the pipeline”.

“As such, now is the time for the government to review the current policy settings it has in place for early-stage fintechs and startups. 

“This includes recalibrating and expanding the Early Stage Venture Capital Limited Partnership (ESVCLP) and Early Stage Innovation Company (ESIC) schemes, reviewing regulation on crowdfunding -- an industry that has significantly grown and evolved since it was introduced in 2017.”

He said the organisation also cautions against proposals that will limit investment and damage investor confidence, such as ASIC’s suggestion to increase the sophisticated and wholesale investor test thresholds.

“Austrade’s FinTech Trade and Investment Program (FTIP) is also slated to end this year. We’re calling on a renewal of the program, on the grounds that it has attracted millions in trade outcomes and created hundreds of jobs. 

“According to the latest FinTech Census, over one-fifth of all Australian fintechs generate half of their revenue overseas.

“To date, we’ve held an incredibly productive relationship with the Federal Government, and both it and its agencies have made significant headway on navigating regulation affecting fintechs. We look forward to continued work alongside them and hope to see support for fintech through the Budget process,” D’Almeida concluded.