The development of the Australian Fintech sector has opened up huge opportunities for the ICT sector, according to a recent report from Frost and Sullivan.
The analyst firm highlighted the areas of security, Cloud, managed services, blockchains, biometrics and datacentre as key areas for the industry.
The report, titled Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020, states that Australia’s development as a leader in Fintech innovation will require concerted effort from government agencies and established financial institutions and will involve partnerships and research collaboration between banks and start-ups.
The firm said It will also present many diverse and lucrative growth and development opportunities for ICT companies that will help form the necessary ecosystem for a leading Fintech market.
According to the report, data and connection security will be the most significant challenge for Fintech companies in Australia; largely because mobile payments make up the majority of the revenues of all the Fintech segments.
Reliable security will be a key issue and an important selling point to ensure success as this will allow Fintechs to build consumer trust in order to grow and compete with established institutions.
Australian Fintechs need to partner and collaborate with security vendors and ICT companies to improve the security and connectivity of increasingly mobile-centric financial services and to protect a user’s financial data.
Frost & Sullivan expects APAC revenues for cyber security in the banking and finance security technology market to grow at a CAGR of 7.31 per cent over the forecast period of 2015-2020.
Frost & Sullivan A/NZ research analyst ICT Practice, Saranga Sudarshan, said established institutions already have large security expenditures, with security systems and protocols built over many years.
“Attacks against these institutions are highly unlikely and more unlikely to be successful. However, the sensitivity of financial data,unlike any other kind of personal data, will mean security will be a concern at every other stage of a product’s delivery chain,” he added.
“End-user attacks are the highest priority given that the decentralisation of personal smart devices, whether they are wearables, smartphones or personal computers, will make storage of end-user credentials the most vulnerable to security attacks.
"Uniform security protocols will not be implemented without significant standardisation of operating systems and version updates.”
The firm has predicted that biometric security will be the future of mobile security and Fintechs will drive the expansion of biometric security.
Frost & Sullivan anticipates that biometric authentication will be the future of mobile security, with extensive biometric security features developed or announced for implementation in all new smartphones over the next 18 months.
Blockchain development for financial services has attracted various ICT companies to develop blockchains with different revenue models. Some companies have opted for a blockchain-as-a-service model, while others have opted to sell cryptocurrencies.
The analyst also singled out analytics as one example of a software suite that is available to Fintech and established financial institutions and a big opportunity for ICT companies to sell into.
“The Cloud computing capability of Watson Analytics presents a possible model for other AI platforms aimed at the financial services sector,” according to Frost and Sullivan A/NZ ICT practice head of research, Audrey William.
“AI hardware architecture is the foundation for customised AI software, and Facebook’s Big Sur is an example of an AI hardware architecture that allows Fintechs and established financial institutions to build their own AI systems. Customised AI systems would allow a range of AI solutions to compete in a market of “off-the-shelf” AI Analytic packages,” she stated.
In addition, the report showed datacentre requirements will be unique for Fintech.
There will be huge opportunities providers offering tailored co-location services, managed hosting services and Cloud storage. The firm believes the rapid growth of Fintech companies offering personal and business finance will present opportunities for both wholesale and specialist datacentre providers.
It also showed telcommunications companies and system integrators have the opportunity to offer managed services across security, Cloud, data centre in areas such as digital payments, blockchains, biometrics and artificial intelligence.