Fintech start-ups thrive in Australia as the nation enjoys effortless banking services

Australia is shaping up to be a destination for financial technology or fintech start-ups. As local banks are gradually opening up to the fintech industry, Australia is in a position to be the fintech hub of the Asia Pacific region. While Australia has relative strength in financial services enough to lead the fintech industry in Asia, right policy environment and supporting ecosystem must be set up to push through.

Analysts believe that to be at the forefront of this financial innovation, Australia has to emulate what London has done. London, the image for the fintech revolution and the global fintech hub, became that way through gumption and significant support from policy makers.

According to Business Spectator, the innovation in financial services came from the recognition that something must be done urgently to generate jobs and prevent London from becoming irrelevant after the financial crisis. With the right level of policy and corporate support, London has been able to transform itself into a global fintech leader in just a few short years.

Aussie’s appeal to fintech

Companies can list on the Australian Securities Exchange by meeting either a profit or an asset test, unlike other exchanges where certain profit milestones must be met. This is suitable for tech companies that aren’t making a profit because they are spending money developing new technologies. With a minimum market capitalization of $10 million after a capital raising, companies are ready for the Australian exchange.

The appeal also lies in the end of Australia’s long mining boom, which has created a pit of shell companies with few assets left. Many small miners have become the target of backdoor listings by technology start-ups. Also called a reverse takeover, backdoor listing means that a company is able to go public by being acquired by an already publicly traded company called a shell company.

For example, Silver Falcon Plc (LSE: SILF) is a shell investment company that is aiming to acquire fintech start-ups. The newly formed company wants to take advantage of London’s booming fintech start-up scene, which had seen record investment of £357 million (AU$750 million) so far in 2015.

“We look forward to acquiring companies that generate value for our shareholders through operational improvements, along with potential further complementary acquisitions,” Silver Falcon Director and Chairman Geoffrey Dart said, as quoted by City AM.

Working with the Aussie government

The Brisbane Times reported that 32 of Australia’s start-ups, investors, and start-up accelerator financial technology companies have sent a statement to senior government ministers highlighting the necessity to reform federal government regulations and bring an end to the loss of billions of dollars in tax revenues.

The companies also stated that they are experiencing difficulties with “accessing credit data, restrictions on fintech investments receiving tax concessions extended to other areas of the economy, and the lack of a coordinated government approach.” Confusion remains on the legal status of digital currencies in the country, which results in bitcoin companies having to deal with all kinds of problems exclusively related to cryptocurrency.

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