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Agile insurtechs respond to crisis opportunities

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Agile fintech companies, including insurtechs, have been able to respond quickly to the COVID-19 crisis and make the most of the new opportunities it has presented, according to the latest EY FinTech Australia Census.

This year’s Census is based on an online survey conducted between July and August of 111 fintechs across Australia, as well as a series of interviews with fintech leaders and the heads of innovation functions within major Australian financial services organisations.

The survey finds Australia’s fintech sector has maintained momentum despite COVID-19 and capital constraints, with 39% of local fintechs surveyed now counting more than 500 paying customers, up from 27% last year.

Despite the challenges of operating during a global pandemic, the Australian fintech industry is still managing to sustain its revenue base, attract more paying customers and plan for future global expansion, EY says.

Despite current global challenges, Australian fintechs also remain largely optimistic about offshore opportunities, with 88% intending to expand overseas in the future.

The report says Indonesia offers “plentiful opportunities for insurtechs and payments providers” with the advantages of proximity to the home market and an enormous underbanked or non-banked population.

However, nearly 75% of the respondents reported the COVID-19 pandemic had worsened their capital-raising ability.

“It’s not all smooth sailing,” Meredith Angwin, Fintech Advisor, Ernst & Young Australia, said.

“While the industry continues to face its usual headwinds of regulatory concerns and competitive pressure, it is now also contending with added difficulties emerging from the pandemic, such as the tightening of capital and concerns that consumers may return to the perceived safety of major incumbent institutions for their financial services needs in uncertain times.”

Fintech founders were positive overall towards Open banking and Consumer Data Right (CDR) accreditation. EY says the initial release in banking in July went smoothly and accredited data recipients expanded their transaction volumes in the first three months.

“If recent Senate interim report recommendations are accepted, CDR will extend … into superannuation, general insurance, private health insurance and potentially other areas,” EY says.