As artificial intelligence takes center stage globally, Australia's fintech industry is contracting in blockchain and cryptocurrency sectors, according to a recent report.
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The fintech industry in Australia is currently undergoing a significant transformation, with a noted contraction in the blockchain and cryptocurrency sectors as the global focus shifts towards artificial intelligence (AI), according to a recent report.
Embracing AI over Blockchain and Crypto
Financial technology, commonly known as fintech, is a rapidly evolving field. In Australia, this evolution appears to be marked by a pivot towards AI, at the expense of blockchain and cryptocurrency. This shift is evidenced in a recent report, which indicated that Australian fintech companies are increasingly prioritising AI over blockchain and crypto.
According to the report, the number of fintech companies in Australia that are focused on blockchain and cryptocurrency has decreased significantly over the past 12 months, in contrast with the rising number of firms turning their attention to AI.
Related: Australia Gears Up for Regulatory Changes in Fintech and Cryptocurrency by 2024: KPMG's Insight
Details of the Report
The report presents a comprehensive snapshot of the Australian fintech landscape, based on data from more than 200 local firms. The study uncovered that the number of Australian fintech firms with a focus on blockchain and cryptocurrency fell from 23% in 2020 to 16% in 2021 – a 30% decrease.
Conversely, the number of companies working on AI-related projects increased from 20% in 2020 to 26% in 2021, marking an upsurge of 30%. What’s more, the report noted that companies focusing on AI are more likely to secure funding, suggesting a broader industry trend towards artificial intelligence.
Related: Australia Steps Up Crypto Regulations: Compliance No Longer a Choice
Potential Reasons for the Shift
- Regulatory Uncertainty: Regulatory uncertainty surrounding cryptocurrencies could be a contributing factor to their decreased preference. AI, on the other hand, does not face the same level of regulatory scrutiny, making it a safer bet for businesses.
- Market Volatility: The volatile nature of cryptocurrencies makes them a risky investment. In contrast, AI offers more predictable returns, making it increasingly attractive for businesses.
- Applicability: While blockchain and cryptocurrencies have specific use cases, AI has wider applicability across various sectors, including healthcare, retail, and finance, which could make it more appealing to businesses.
Implications of the Shift
The shift from blockchain and cryptocurrency to AI could have significant implications for the Australian fintech industry. Notably, it could affect the types of innovations that are being developed, the types of skills that are in demand, and the overall competitiveness of the sector.
Furthermore, given the global trend toward AI, Australia’s shift in focus could affect its standing in the international fintech landscape. As it stands, the country must work strategically to ensure it remains competitive in an increasingly AI-driven global economy.
Related: Australia Proposes Adoption of OECD Crypto-Asset Reporting Framework
Conclusion
The pivot from blockchain and cryptocurrency to AI in the Australian fintech industry is a notable development. As the world increasingly embraces AI, it’s a timely reminder for businesses and governments to stay on top of evolving trends and adapt their strategies accordingly.
While the contraction in the blockchain and crypto sectors might seem concerning, it’s important to remember that these technologies are still in their early stages and have the potential to bounce back as they mature and regulatory challenges are addressed. In the meantime, the rise of AI offers exciting opportunities for innovation in the fintech industry.
Michael has been a vital voice in crypto security, focusing on blockchain vulnerabilities and emerging technologies. With a background in cybersecurity and fintech, he ensures our readers stay informed on safeguarding their assets while exploring new opportunities in the crypto space.
