Investment in Australian fintech reached a record $656 million in 2016, more than triple the $185 million invested in 2015, according to a report by professional services firm KPMG.
This equates to an annual average growth rate of around 90 percent over the four years leading to 2016.
The growth was driven by large mergers and acquisitions, and venture capital transactions, including CHAMP Private Equity's acquisition of Pepperstone, Stirling Products' acquisition of Mx360 Group, and large funding rounds from Tyro and Prospa, according to KPMG's The Pulse of Fintech report.
The report shows venture capital investment in fintech reached $71 million in 2016, a substantial drop from 2015's $175 million total, though on a similar level to 2014's $88 million total.
"Venture capital activity, while down nominally on last year's figure, remains reasonably strong. While mega deals result in peaks and troughs in overall figures, the trend is clear and demonstrates increasing interest and investment activity in fintech," said Ian Pollari, head of banking at KPMG Australia.
Meanwhile, a survey by Startup Muster shows that fintech is now the most prevalent industry for Australian startups, with 15.9 percent of the startups and 42.1 percent of the supporters operating in the finance technology space.
The Startup Muster survey showed fintech to be among the top areas investors are looking to support, with 56.2 percent of investors eyeing the industry.
While Australia trended upwards, global levels of fintech investment slid by 47 percent to $24.7 billion in 2016.
In a statement, Australian Treasurer Scott Morrison said the federal government is "keenly aware" that the financial services sector plays a critical role in the Australian economy.
Morrison noted the government's Fintech Advisory Group's progress of the review of opportunities for blockchain; the examination of ways to improve data availability; the introduction of the regulatory sandbox to support new entrants testing their financial services offerings; and the extension of venture capital tax concessions for early-stage startup investments.
"Whilst these measures have been successful and well-received by industry, the Turnbull government continues its fintech agenda by commencing work on an enhanced package of further reforms to be released and implemented this year," Morrison said.
As the finance industry is not an easy one to navigate, especially for emerging players, Morrison said the government is working on an enhanced package of further reforms to be released and implemented this year.
"The Turnbull government has announced its intention to stop the 'double taxation' of digital currencies under the GST regime and the development of legislation to extend the crowdsourced equity funding framework to private companies."
Meanwhile, Startupbootcamp FinTech believes the big banks are feeling the fintech threat.
In the Review of the Four Major Banks: First Report released in November 2016, the House of Representatives Standing Committee on Economics recommended that banks be forced to provide open access to customer and small business data by July 2018 for competing banks, startups, and other financial institutions.
The committee suggested that the Australian Securities and Investments Commission be charged with developing a binding framework to facilitate this sharing of data, making use of APIs, and ensuring that appropriate privacy safeguards are in place to allow such a practice.
"Increased access to financial sector data, as noted by the Productivity Commission, should also intensify competition in the financial sector. This is because markets work best when customers are informed. At present, banks, not consumers, hold the data. This gives banks a significant degree of power," the report [PDF] states.