Fintech

Melbourne has a growing list of homegrown and foreign fintech firms, find our why.

Melbourne is home to two of Australia’s major international banks, the Australian sovereign wealth fund and most of Australia’s industry superannuation funds. This has made the city a thriving place for cutting edge fintech start-ups to develop and grow their business.  

Financial institutions and newcomers alike are keen to drive innovation.  The city is home to more than 295 fintech start-ups.1 As of November 2020, there are five fintech unicorns headquartered in Melbourne, collectively valued at over US$30 billion.

5 Unicorns headquartered in Melbourne

  • Airwallex (cross border payments - founded 2015, est. valuation US$1.2 billion)
  • Afterpay (buy now pay later - founded 2014, market cap. US$31.8 billion)
  • Judo Capital (challenger bank - founded 2016, est. valuation US$0.925 billion)
  • MYOB (business online accounting software)
  • PEXA (digital property settlement - founded 2015 est. valuation US$1 billion)

At the 2020 Finnie Awards, the national fintech awards run by Fintech Australia and sponsored by the Victorian Government, Airwallex won the Fintech Organisation of the Year award while AfterPay received the Global Market Presence award.

There are also scaleups such as Moula ($160 million Series D in 2020), Prospa and Assembly Payments.

Foreign firms that have made Melbourne their home include Cognizant, Slack, KnowBe4SquareZendeskTransferWise, Dataminr, Stripe, Revolute, Xero and Tradeplus 24.

Source: 1. Traxn, July 2019

Australia punches above its weight globally for fintech.

In 2019, the A$3.8 billion Australian fintech sector saw 252 per cent growth. Frost and Sullivan estimated growth between 2015-20 to be 76.3 per cent per annum and with more than 40 per cent of consumers yet to become fintech adopters the market is predicted to grow further to $28 billion by 2030.

Here are some of Australia’s notable attributes:

  • Fourth largest pool of managed funds in the world, valued at US$2.1 trillion in 2019.
  • Number one in the world for contactless payments.
  • One of the highest penetrations of smart phones in the world
  • One of the highest fintech adoption rates in the world (open to new products)
  • A global leader in the Buy Now Pay Later (BNPL) sector
  • A high cloud-based adoption rate
  • Tenth largest ecommerce market in the world by revenue
  • A strong regulatory framework (including a world leading sandbox that allows fintech’s to test their services for up to 24 months without an Australian financial services  licence).

There are opportunities right now for fintech in Melbourne and Australia

Here are some of the most significant trends.

Increased fintech adoption activity

Fintech adoption in Australia is steadily increasing, driven by greater use of money transfer and payments, particularly peer-to-peer payments and non-bank money transfers. Continued growth in customer digital adoption provides an opportunity for firms to create more services and improve customer engagement through mobile devices and AI.

Open banking

At the beginning of August 2019, Australia took a major step towards an open data economy by passing the Consumer Data Right legislation, which gives customers control of their data and enables them to share it with third parties. There are significant opportunities for fintechs to capitalise on this data and develop new services. The Royal Commission into Financial Services has eroded trust in banks.  Customers are now more likely to be willing to consider alternatives to ‘traditional’ loans and investments.

Cybersecurity needs

Cyber security will become of paramount importance to increase consumer awareness and confidence in digital products.  Melbourne is rapidly emerging as a market for cybersecurity solution services.

Industry collaboration

Australian incumbents are leveraging partnerships with start-ups to reduce the costs of services and improve customer experience. Rather than developing technology in-house, incumbents are partnering with start-ups to create synergies.  An example of this can be seen with NABs partnership in 2020 with Lighter Capital, a new early-stage debt funding model.

Superannuation needs

There is a greater focus on the superannuation sector as a source of capital to fintech start-ups. Due to it being a relatively untapped market, there is an opportunity for fintechs to engage with superannuation funds to create individualised experiences for their members and to provide cost effective advice.

Fintech adjacent opportunities

There are significant adjacent opportunities in the fintech sector that are showing considerable growth.  Sectors such as RegTech and PropTech.

Why Melbourne for your fintech business?

The Victorian Government ‘gets’ financial services and understands the importance of building an ecosystem in which fintech businesses are nurtured and encouraged.  Melbourne’s concentrated finance sector delivers considerable margins with room for fintech to disrupt and grow.

Here are some of the reasons why you should consider Melbourne when setting up your fintech business.

Melbourne is Australia's leading tech city with a robust and growing fintech community

  • According Savills it is the only Australian city that is among the best 22 cities for tech companies in the world.
  • Victoria's fintech sector is leading innovation in banking and payments, credit and lending, insurance and wealth management.
  • Three Victorian fintech companies, Airwallex, Judo Bank and Afterpay Touch, are among the world's top 100 FinTech Innovators.

Melbourne has a large and sophisticated financial services sector.

The financial and insurance services sector is the largest sector of the Victorian economy, accounting for 11 per cent of GVA and employing over 130,000 people.

  • Melbourne is home to 34 per cent of all superannuation funds in Australia, with over AU$400 billion in assets under management.
  • Two of Australia’s big four banks NAB and ANZ are based in Melbourne.
  • Australia’s two largest health insurance funds – Medibank Private and BUPA Australia - are headquartered in Melbourne, representing over 50 per cent of the Australian health insurance market share.

Innovation hubs, co-working spaces, accelerators and access to capital support Melbourne start-ups.

  • Melbourne has many innovation hubs and co-working spaces, such as York Butter Factory, Inspire9, Stone and Chalk and Angel Cube.
  • Victorian industry and research-led accelerator programs support Victorian-based fintech start-ups, including the Melbourne Accelerator Program, Startupbootcamp and NAB Ventures.
  • Victoria's world-class universities generate more tech-capable graduates that both NSW and Singapore combined.
  • Victorian fintech companies have dominated key funding rounds, accounting for almost 80 per cent of A$2 billion allocated to Australian start-ups in 2018-19.
  • Australian fintech venture capital firms have grown by 150 per cent since 2014. Between 2014 and 2016, Sydney received $US171 million in fintech-related venture capital, more than anywhere else in Australia.

Victoria is a business-friendly state

  • Victoria is ranked as the most business-friendly state in Australia by the Business Council of Australia.
  • Melbourne’s salary costs are on average 10 per cent lower than Sydney for the staff you are likely to require.
  • Office lease costs are up to 38 per cent cheaper in Melbourne compared to Sydney
  • Melbourne has the lowest tax burden of any Australian state.

Strong government commitment and support

The Victorian Government:

  • funds the Innovation Hub in Melbourne’s Docklands CBD to bring together businesses, research organisations and industry associations.
  • is establishing a new digital hub in Cremorne for the delivery of digital short courses and industry internships.
  • has set up a wide range of funding programs and assistance packages to help startups grow. For example, it has invested $60 million in a fund of funds scheme, $25 million in a venture debt fund and is offering $50 million in low-interest loans to help fund innovative start-ups undertake research and development.
  • funds start-up agency LaunchVic, which plays an important role in supporting the start-up ecosystem in areas such as training, pre-accelerator programs and mentoring.
  • sponsors the Finnies, the national Fintech Awards, and Intersekt, Fintech Australia’s annual conference.

Australian fintech series - presented by Invest Victoria

Session 1:  Changes, Opportunities and Challenges

Session 2:  European Fintechs in Australia

Session 3:  Meet the Regulator

Session 4:  Disruption and Transformation in the Financial Sector

Contact our fintech specialists

For UK and Europe enquiries contact
Julia Mills
Investment Director
Email Julia
For US enquiries contact
Joya Raha
Investment Director
Email Joya
For all other enquiries contact
Ian McLean
Market Leader - Melbourne
Email Ian