Australia’s fintech industry has become a critical component of the national economy, driving growth, employment, and financial inclusion. Despite these contributions, the sector still faces headwinds, including limited access to capital, technical integration challenges, and lingering consumer trust issues, according to a new study by Deloitte.

Drawing on survey data from 63 fintech companies, case studies with Australian fintech companies, and economic modeling of more than 580 entities nationwide, the report identifies access to capital as the most pressing barrier to growth, cited by a third of the surveyed businesses. 80% ranked it among their top three challenges.

The report highlights several reasons for the funding shortfall. First, venture capital (VC) investment in Australia remains low compared with international peers. For example, in 2025, Australian fintech companies secured a total of AUD 868 million (US$597 million), compared to US$1.6 billion, US$5.3 billion, and US$1 billion for Singapore, the UK, and Canada, respectively, according to research by Cut Through Venture, Folklore Ventures, and CB Insights.

Second, investment in Australia’s fintech sector remains largely concentrated among a small number of late-stage players. For example, in 2024, the three largest fintech transactions in the country accounted for more than half of all investment.

This focus on late-stage ventures significantly impacts seed and early-stage startups, creating a steep hurdle for pre-revenue companies that need funding to continue to innovate and expand. This is especially challenging for Australia given that over half of the surveyed fintech companies are at the pre-seed or seed stage of funding, underscoring a young sector.

Third, fintech funding in Australia has significantly declined over the past years, reflecting global trends. Total capital raised by Australian fintech startups in 2025, or about ~AUD 1 billion (US$684 million), marks a sharp drop from AUD 3 billion (US$2 billion) in 2021 and AUD 2 billion (US$1.4 billion) in 2022, according to Cut Through Venture and Folklore Ventures data.

In addition, challenges like restrictive disclosure rules add complexity. These rules prohibit the inclusion of certain information in offer documents, including information related to their strategic positioning and future plans, deterring institutional investors like superannuation funds and pushing many startups to seek overseas capital.

Ecosystem barriers

In addition to funding challenges, Australian fintech companies face systemic ecosystem barriers, including technology integration. 25% of the surveyed companies cited tech integration as their top hurdle, reflecting the operational complexity of scaling secure, compliant, and interoperable systems.

Barriers to integration can prevent products from coming to market and hinder innovation. Regtech company BNDRY, for example, shared that challenges with partnering and integrating with large banks have forced the company to pivot its focus towards smaller organizations in adjacent markets.

Another barrier is awareness of, and trust in, fintech products. Companies polled by Deloitte said that a persistent awareness gap continues to suppress demand for independent solutions. For example, many businesses still believe that corporate card programs are only available through traditional banks while plenty of fintech startups are now providing these services.

A 2022 study by open banking startup Frollo further highlights this trend. The study found that despite clear signals that Australians are keen to embrace open banking use cases, issues of trust towards financial institutions remain a potential roadblock.

Only 51% of Australians trust their banks enough to share financial information with them by linking their accounts. This level of trust falls even further when it comes to sharing their financial data with utility companies, trusted by 37% of respondents, and brokers and financial advisors, trusted by 34%.

Talent shortage is the third largest ecosystem barrier cited by the fintech companies polled by Deloitte, with 13% of respondents identifying the issue as their top barrier to growth. Most fintech companies experiencing growth barriers intend to expand their workforce, with 67% of those facing talent shortages planning to increase employee numbers, and 57% indicating they wished to increase hiring in Australia.

These results show that labor demand is strong, and that collaboration among all industry stakeholders will be critical to address the talent shortage.

A key contributor to the economy

Despite these hurdles, fintech remains a cornerstone of Australia’s economic landscape. In 2024-2025, the sector directly added AUD 13.6 billion (US$9.3 billion) in value to the country’s GDP, with a further AUD 10.6 billion (US$7.4 billion) in indirect value generated through their demand for goods and services from upstream industries. The sector employed roughly 50,200 full-time equivalent (FTE) staff, while indirectly supporting another 59,000 FTE roles.

There is now an estimated 884 active fintech companies in Australia bringing innovations across banking, insurance, wealth management, digital identity, regtech, credit analytics, and more. The sector is predominantly homegrown, with 77% of these ventures being headquartered in Australia, while 10% are from in the US, Singapore, or New Zealand.

Tech for enterprise represents the largest vertical, accounting for 56% of the market. It’s followed by digital payments with a 35% share, digital lending at 29%, and wealthtech at 21%.

61% of Australia’s fintech companies are small and medium-sized enterprises (SMEs) with fewer than 50 employees, and the majority are focused on business-to-business (B2B) or business-to-business-to-consumer (B2B2C) operations. Only 22% are primarily business-to-consumer (B2C).

Australian fintech companies mainly focus on improving efficiency. Almost 80% of the fintech businesses surveyed said that their primary value creation is lifting business productivity by digitizing workflows, reducing fraud, lowering transaction costs, improving data quality, and driving automation. 77% emphasize driving innovation and digital capability, while 66% focus on enhancing consumer outcomes.

Featured image: Edited by Fintech News Australia, based on image by freepik via Freepik