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Sydney is challenging Singapore as the region's fintech startup hub

Britain’s Foreign Minister Boris Johnson in Sydney last week at the Tyro Fintech Hub. William West/AFP/Getty Images

The number of fintech startups in Australia has increased to 579 companies from less than 100 in 2014, according to a study by KPMG launched today.

Australian fintech investment is strong with $US675 million invested across 25 deals in 2016 despite an overall global decline in investment in the sector.

And about 60% of fintech companies are based in Sydney, which has been the major recipient of fintech venture capital investment at $US171 million between 2014 and 2016.

The report, Scaling the Fintech Opportunity: For Sydney and Australia, has been produced by KPMG for the think tank, Committee for Sydney.

The report finds, based on interviews with the Australian fintech industry, that Sydney is seen as ahead of Hong Kong but slightly behind Singapore when it comes to being a leading global centre for fintech.

The report says Sydney could “potentially challenge Singapore”.

Tim Williams, chief executive of the Committee for Sydney, says internationally, the city’s financial services sector has been benchmarked and is rising.

“Apart from its sheer quantum — Sydney’s financial services sector creates 9% of national GDP and is bigger in scale than the financial services sector in either Hong Kong or Singapore — a key element in its emerging global reputation is the speedy progress we have made in Fintech in Sydney,” he says.

Fintech is mostly driven by local companies, with 512 Australian and 67 offshore companies operating locally.

The range of sectors has also diversified substantially, with 10 Fintech categories having more than 20 Fintechs operating locally.

The two largest sectors by number of Fintech companies and capital investment are payments (128 companies) and lending (80 companies), with substantial growth in both categories.

Wealthtech (77 companies) ranks third highest for number of companies.

However, the report finds that the Australian sector faces threats from international tech giants and disruptive startups.

“Also, regulatory challenges continue to stifle innovation and have the potential to create uneven playing fields for incumbents, start-ups and tech giants alike,” the report says.

“Sydney, and Australia more broadly, doesn’t yet have a clear business brand for Fintech and beyond our quality of lifestyle there is a lack of clear incentive for international talent to come to Sydney to start a business.”

The report says Australia has potential to lead the world in areas of fintech innovations such as Payments, Regtech and Blockchain.

“Although London is seen as the clear global leader there is an opportunity for Sydney to become the Fintech hub of Asia,” the report says.

Danielle Szetho, CEO of the industry group Fintech Australia, says she’s pleased to see the finding that Sydney is a serious challenger to Singapore.

“FinTech Australia, as Australia’s industry association for fintech, also stands ready to assist with implementing the report’s recommendations,” she says.

“We are currently rolling out an international public relations program in support of Australian fintech and some of the insights given by this report will be hugely beneficial for this program.”

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