TIN releases Fintech Insights Report as NZ sector grows

Technology Investment Network (TIN), with the support of FintechNZ, has published NZ's first Fintech Insights Report, providing in-depth information on the sector worth $2 billion globally.

The inaugural report looks at the local fintech export sector based on data from TIN's 2021 survey results.

This includes size and significance, key export markets, investment challenges and opportunities, as well as a comprehensive directory of 84 early-stage New Zealand-based fintech companies.

TIN says the fintech sector's recent figures show it has become one of the fastest-growing market sectors to feature in the TIN Report for over a decade, adding that its five-year compound annual revenue growth rate is 32%, three times the TIN200 five-year average.

Additionally, fintech was the second-largest market sector in the TIN Report in dollar value growth, accounting for almost 25% of all growth, and the third-largest for total revenue.

"The continuing growth of cloud-based financial management and payment systems, accelerated by the COVID-19 pandemic, will only serve to strengthen the importance of the New Zealand fintech sector as more tech companies and investors seek opportunities," TIN managing director Greg Shanahan says.

"In addition, the constant flow and high cost of implementing global financial regulations has provided a robust revenue stream for the sector, as well as the potential for further exciting innovation and entrepreneurship.

"As a result of its exceptional growth in the sector, it's also been at the forefront of investment and M-A activity, particularly over the past two years.

The TIN200 rankings for 2021 included 19 fintech companies generating $1.8 billion in revenue between them, equivalent to 13.1% of the total TIN200 revenue.

Furthermore, total growth for the sector in New Zealand was $358.7 million in 2021, which TIN notes is a 25% increase on the previous year, and Wellington-based accounting software company Xero made up for over 46% of sector revenue.

TIN says, unlike the TIN200, double-digit growth was evident throughout every company revenue band, and all TIN200 fintech bands had higher growth than the TIN200.

Moreover, companies with revenues between $100-$199 million had the most significant growth, increasing by 122.6%.

Key findings of TIN's Fintech Insights Report include:

• Growth in overseas revenue for TIN200 fintech companies has increased by 26.2% and is significantly higher than the average TIN200 export growth rate of 14.4%. The largest export market was Australia, generating revenue of $586 million, an increase of $111 million or 23.4%.
   
• TIN200 fintech companies increased their profitability (EBITDA) by 38.3% in 2021, with EBITDA representing 20.9% of revenue (the second-highest of all TIN secondary sectors) and higher than the TIN200 average of 18.4%.
   
• Fintech companies grew their workforce by over 950 people in 2021, representing growth of 14.2%, which is more than double the TIN200 average of 6.0%.
   
• The six publicly-listed fintech companies account for two-thirds of the TIN200 fintech company revenues, with Xero and Pushpay's revenues of $848.8 million and $270.1 million together contributing 61.1%.
   
• The fintech sector has the second-highest average annual wage at over $100,000, 16.9% higher than the TIN200 average of $88,005. Total wages and salaries for fintech companies account for 43.1% of revenue, higher than the TIN200 average of 36.1%.
   
• The fintech sector increased its investment in research and development (R-D) by 36.9% to be 20.5% of revenue, aided by the Government's Research and Development Tax Incentive.