More than $2 billion in investment activity was recorded for Australian fintech firms last year, according to KPMG.
The professional services firm’s Pulse of Fintech H2’24 report discovered that total fintech investment activity in Australia more than doubled from $839 million in 2023 to $2.1 billion in 2024.
For the second half of the year in particular, some $1.1 billion in investments were registered across 43 deals.
The report underscored Generation Development Group’s (GDG) acquisition of Lonsec for $197 million, which reached completion on 1 August 2024, as one of the major deals that drove the strong half-year results.
This ranked as the second-largest fintech deal in Australia during the period in terms of transaction value, behind credit check service illion which was acquired by Experian for $820 million.
Another notable Australian deal for the period was the Spaceship acquisition by trading platform giant eToro for $55 million, it noted.
While these transactions were material in value, overall deal count was down by 14 per cent, from 50 in the first half of the year to 43 in the second half.
“Australian deal value improves markedly in 2024, however volumes remain challenged with the start-up and scale-up environment still struggling to find its footing,” KPMG wrote.
Daniel Teper, partner and head of fintech at KPMG Australia, said larger players in the industry continue to enjoy greater investment activity than their smaller counterparts.
“As foreshadowed in previous reports, the investment activity taking place in the Australian fintech sector remains focused on the larger and more established end of the market. In stark contrast, activity at the seed, start-up and scale-up segment remains challenged, and reflects the continued level of uncertainty and caution in the market,” he explained.
“With rates still at a 14-year high and an upcoming federal election in the first half of 2025, we expect investor sentiment to remain vigilant and likely focused on the mature and strategic end of the market.”
KPMG also delved into the wealth management technology segment of the fintech market. Across the globe, total investment into wealthtech rose twofold, from a more than 10-year low of US$190 million in 2023 to US$400 million in 2024.
A key trend that played out in 2024 that is set to continue this year is the take up of artificial intelligence (AI) solutions, with advisers looking to enhance client services and address gaps in the wealth management market.
“During H2’24, wealth managers continued to look for better ways to engage with their clients, to provide them with attractive investment opportunities, and to incentivise them to invest,” the report stated.
“This quest for value has driven significant interest in AI solutions – from making robo advisers more valuable and better able to understand and respond to client needs and priorities to enabling wealth management advisers with the data and analytics they need to better engage with and provide value to their clients.”
Financial institutions are increasingly interested in AI enablement of the wealth management space to reduce costs and allow advisers to provide further value, it said.
