Digital Australia is losing its competitiveness
Australia’s fintechs and neobanks are experiencing record growth, but the country’s digital competitiveness continues to decline relative to its global peers.
-Global survey shows Australia’s digital competitiveness continues to decline
-Australian fintech and neobank sectors show record growth
-CreditorWatch believes Australia remains a global fintech leader
By Danielle Austin
The strong growth of the fintech and neobanks sectors in Australia has not been able to stop the continued decline in the country’s digital competitiveness, reveals the IMD World Digital Competitiveness Ranking.
Australia’s ranking fell for the third year in a row to 20 out of 64 countries.
The nation has demonstrated strengths that could drive digital evolution. These included a strong regulatory framework to support start-ups, IT integration of software piracy and e-government.
Business agility and knowledge transfer between businesses and universities ranked particularly low.
Australia’s Economic Development Committee says there is a need to foster collaboration between the business and academic sectors to support investment, innovation and value creation in the tech space.
The Committee argues that improving digital competitiveness and harnessing new technologies would create employment opportunities, improve government services and support decarbonization and climate change solutions.
Additionally, the ranking demonstrates Australia’s lack of “future-proofing”, affecting its ability to maintain its digital competitiveness.
The federal government has repeatedly expressed interest in becoming a leading digital economy by 2030, and is no shortage of opportunities for digital advancement or opportunities to adopt emerging technologies.
The other side of the room
The results of the IMD World Digital Competitiveness Ranking contrast with its other measures, which show strong growth in the fintech and neobanks sectors in Australia.
Although these technologies have long been adopted rapidly by young people, regulatory changes are improving their appeal to a wider audience.
Global digital financial services have also benefited from increased adoption during the covid pandemic, as demand for digital solutions has risen sharply to support remote workers.
CreditorWatch research shows Australia remains a leader in fintech, with the number of Australian fintech companies rising to 733 in 2020, from 629 in 2019.
CreditorWatch says the adoption of fintechs can help businesses compete globally, allowing them to access new customer segments and markets. Firms that remain engaged in FinTech development should lead new financial systems.
Neobanks in the Australia-Pacific region experienced record growth in the first half of 2021. This year, total neobank customer acquisitions increased by 44.57% and new customer acquisitions by 113.62%.
Finbold says the growth of the neobank industry has been driven by large tech companies seeking to leverage regional innovation. The increase in product offerings and the improvement of the regulatory environment have also contributed.
Advances in fintechs and neobanks are encouraging traditional banks to explore digital trends.
Many traditional banks have introduced in-house fintech capabilities or have formed partnerships with existing fintech or neobank companies to bring new products to clients.
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