The fintech sector is bullish it can grab market share from big banks and incumbents with the advent of open banking and as the fallout from the Royal Commission plays out, EY's latest fintech census shows.
With one-in-five fintechs now turning a profit, the sector is confident it can swoop in the financial services sector and provide competitive and differentiated offerings, the report said.
This confidence is further fuelled by the majority (70%) operating at the post-revenue stage and earning 2.25 times median revenue growth.
Of the 151 Australian fintechs surveyed, about one quarter (23%) is dedicated to the wealth and investment industry.
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EY Australia fintech adviser Meredith Angwin said in the three years since the census launched, the sector has evolved from being "fragmented" to one that is becoming a first choice for many businesses and consumers when selecting a financial service provider.
She said fintechs generally expect the Royal Commission to be a "nett positive" for the sector over the medium term.
Fintechs also believe the Royal Commission will slow incumbents' innovation activity for the next 12-18 months, as the wider financial services industry deals with the impact of the final report that will be delivered in early 2019, she said.
The report also found that incumbents aren't as open to partnering with fintechs.
About half (47%) of fintechs surveyed said building partnerships with banks and other financial institutions is increasingly becoming challenging.
About 70% of fintechs relied on private funding to raise an average capital of $3.2 million.
FinTech Australia chair Alan Tsen said open banking, comprehensive credit reporting and the removal of double GST for digital currency have contributed to the sector's achievements.
Fintechs' role as "trailblazers" have has been significant in shaping the financial services landscape today, he said.