The Australian fintech ecosystem has remained broadly stable during this year, according to an extensive update from KPMG, which also noted that with 801 independent Australian owned fintech companies, “marking a slight 2% decline year-on-year change from 2024.”
The research report from KPMG also mentioned that this decline, whilst smaller than previous years, clearly illustrates the “challenges that the local sector continues to face.”
KPMG further stated that with investment levels in Australian markets now at lows not seen since 2020 (KPMG Pulse of Fintech H1’2025) and continued macroeconomic as well as geopolitical uncertainties, investors “found it challenging to feel confident in their dealmaking activities.”
The KPMG update also pointed out that this resulted in a decline in the number of active companies in the Australian fintech ecosystem, “partly due to M&A activity.”
Australian fintech companies are faced with “a number of challenges in the current climate, including the limited size of the local market, the difficult capital raising environment (particularly at an earlier stage in the start-up and scale-up stages of growth) and the lack of viable exits.”
That being said, the KPMG report stated that the current pace of decline has slowed down “significantly from previous years, possibly indicating that the ecosystem might have finally reached a more sustainable size and providing hope that we have reached and indeed passed the bottom of the investment cycle, after speculative and rapid expansion in the prior years.”
Currently, the Fintech ecosystem in other jurisdictions is also facing considerable obstacles due to rising economic and political uncertainty. The digital economy has become increasingly globalized and interconnected due to technology advancements that have made it easier to carry out transactions across borders.
Australia remains one of the world’s largest economies despite the challenges it faces.
The report added:
“Australian deals in 2025 have been characterised by strategic consolidation and acquisitions, enabling leading players to strengthen their positions while weaker firms were forced to exit the market. This rationalisation reflects a maturing industry where scale, compliance, and operational resilience are critical to long-term success.”
The report concluded:
“Looking ahead, fintech investors are likely to remain selective with their dealmaking. The ecosystem is entering a phase where quality trumps quantity, and partnerships between fintechs and incumbents are accelerating. Any recovery in the Australian fintech sector, will ultimately be dependent on macroeconomic conditions stabilising and funding availability improving, including a favourable monetary policy environment, with fintech companies focused on building sustainable, scalable and ultimately global business models likely to attract the most attention.”