A new report has called on the Australian government to provide more support for the startup ecosystem in Sydney, contending the Australian capital has the potential to become an Asia/Pacific fintech hub, mirroring developments in London and New York.
The report, Unlocking the Potential by KPMG, has been published by the new Financial Services Knowledge Hub established by the Committee for Sydney with the support of the NSW Government.
Andrew Low, chair of the hub and CEO of Committee member RedBridge comments: “The increasing overlap of financial services and technology presents great opportunities for Sydney as we’ve got high calibre talent and enterprises in both areas. The key is to provide more opportunities for smart start-ups to interact with financial services businesses, both big and small, so we get innovation that is usable and profitable as well as being smart.”
The report calls for the establishment of a not-for-profit physical hub in the Central Business District – co-locating tech start-ups, venture capital and established financial services firms – and the formation of an independent fintech industry association to act as a champion for the sector. The Federal Government is also urged to provide tax breaks for entrepreneurs, while universities and research institutes should be incentivised to examine key fintech themes and explore business opportunities for commercialisation.
Sydney has a total of 950 start-up companies but only a small amount of these are in fintech, the report says, pointing to a number of constraints. These include a relative absence of venture capital funding, uncompetitive tax regimes, and limited participation by established firms in fintech accelerators and venture funding. Westpac’s investment in VC fund ReinventureGroup is highlighted as notable exception.
The UK is held up as a sterling example of the way in which government and commerce can collaborate to create a thriving ecosystem in which startups can flourish.
Ian Pollari, head of banking at KPMG Australia and one of the authors of the report says: “For Sydney, state and city support is a must-have to foster fintech success. London provides an excellent role model for Sydney to emulate, with the UK government in particular leading the fintech charge through innovative funding, alignment and collaboration initiatives.”