The Australian fintech sector is at a major inflection point, with significant regulatory reform on the horizon as new technology solutions emerge, the industry matures and different transaction opportunities present themselves.
So what trends are on the horizon, and what’s at stake? We unpack it all in our contribution to the Chambers Fintech 2025 guide – read some of the highlights below.
Future Outlook: Regulatory Overhaul, Tech Innovations, and Industry Consolidation
Regulatory reforms areas include payments, Buy Now, Pay Later (BNPL), digital assets, Anti-Money Laundering, Climate reporting and risks, Capital Markets, and the Consumer Data Right. One anticipated transformation is in the payments landscape, with expected implementation of a new payments licensing framework.
Following a period of exits and consolidation, the BNPL sector will have to adapt to being regulated as a low-cost credit contract, necessitating financial assessments of customers. Digital asset ownership is becoming more mainstream, urging urgent regulatory clarity. Also, substantial revisions to the ePayments Code are expected to enhance consumer protection and clarify remedies for electronic transactions.
From a technological perspective, emergent areas include PayTo, Blockchain applications and Artificial Intelligence (AI). Despite initial setbacks, PayTo is proving useful for automating subscriptions, bill payments, and salary distribution. Blockchain is anticipated to harbinger a new era of asset tokenisation and stablecoin prominence. AI, despite posing governance challenges, is being increasingly harnessed in financial and credit services.
As the fintech industry matures, consolidation is becoming apparent and strategic investments by financial institutions are common. Meanwhile, secondary trading of securities is gaining momentum among venture capital funds desirous of realising investments.
What’s next?
The Australian fintech sector is on a transformative trajectory involving major regulatory reforms, technology innovations, and industry-wide maturing. Over the next few years, the sector is likely to witness significant consolidation, new products and solutions, as well as novel risks that will need careful navigation on behalf of regulators and industry players.
It is anticipated that the next few years will involve rolling out and bedding down major regulatory reforms across payments, digital assets, BNPL, artificial intelligence and AML/CTF. It is likely these regulatory reforms will trigger consolidation and transaction activity over the next few years, given the cost of compliance and the fact that scale is critical to the pathway of profitability. It is also forecast that that advancements in technology will provide new products and solutions as well as mitigate and/or introduce new risks to the financial system that will need to be navigated by regulators and industry alike.
Want to learn more? Read the full Fintech 2025 guide or reach out to Charmian Holmes, Michele Levine, or Jaime Lumsden.
