FinTech Australia
RSM

 AI adoption near universal 

AI has cemented its place in fintech strategy. Only two respondents report not currently using AI, while almost every business plans to increase investment over the coming year.

Almost two-thirds of respondents have either deployed AI into production environments or made it core to their business model.

 
 

Process automation remains the dominant use case, but fintechs are increasingly embedding AI into customer-facing products, fraud detection and decision-making systems.

Credit underwriting shows how AI use cases change according to sub-sector and business model. 

Overall, AI adoption sits at 19%, but among lending and credit fintechs specifically, that figure rises to 58%.

 

Fintech AI maturity model based on qualitative data

StageTypical use
Stage 1: ProductivityChatGPT, Claude, Copilot for individual tasks and content generation.
Stage 2: Development accelerationAI-assisted coding, testing, debugging and software delivery.
Stage 3: Workflow automationMulti-agent processes, operational automation and business workflows.
Stage 4: Product integrationAI embedded in lending, fraud detection, risk and customer products.
Stage 5: Proprietary AI advantageCustom datasets, Retrieval Augmented Generation (RAG) architectures, industry-specific models and unique intellectual property.

Based on roundtable discussions, Australian fintechs are speeding through the initial stages of productivity enhancements into Stages 3-4. The most advanced firms are already building their competitive advantage around proprietary data rather than specific AI models.

Where AI is it delivering value in fintech

When asked about the measurable value AI creates, fintech leaders are generally enthusiastic. Software development emerges as the function delivering the clearest productivity gains.

According to one participant, equipping a typical mid-level software developer with AI lifts their productivity from one full-time-equivalent (FTE) worker to roughly 2.4 or 2.5 FTE. Another describes retaining highly skilled engineers in Australia instead of hiring offshore because AI has increased local productivity so substantially.

AI amplifies professional experience, but raises questions for junior career pathways

AI is definitely changing attitudes towards headcount and talent. Several leaders note that AI amplifies existing capability rather than replacing it. As one puts it, “if you didn't know how to do something before, AI won't do it for you now.” What it does do is help skilled people deliver on many more ideas, far faster than before.

Several founders frame this as an opportunity for their staff. A developer producing 2.5 times their previous output is a developer who becomes significantly more valuable to the business, not less secure in their role.

Of greater concern is the future talent pipeline. If AI reduces the need for large junior development teams, where will the next generation of senior engineers gain the experience traditionally acquired through entry-level roles?

Participants point to the rise of “vibe coding,” where users generate software quickly with limited oversight and little-to-no understanding, as one symptom of this challenge. They describe interviewing candidates who complete coding tests entirely with AI but are unable to explain their own work.

While this issue extends beyond fintech, it may also present an opportunity. By continuing to recruit and develop curious early-career talent, fintech firms can help preserve development pathways that many technology sectors risk losing.

Hype vs healthy scepticism

Not everyone in fintech is onboard the AI hype train. While the survey does not explicitly ask how (or if) fintechs measure the return on investment of AI products, conversations with industry leaders suggest AI value is uneven. Some admit to implementing AI tools out of fear of missing out, only to wonder whether competitors are extracting greater value from the same technologies.

As one participant put it: “We’ve got Claude, but are we really getting the benefit?”

Another says, “AI is making people slightly more efficient, but if anyone is claiming a massive step change, they are either overstating the impact or paying a massive bill for tokens.”

Cost control is another reason for cautious AI adoption. Some participants express concerns about being 'Microsofted'; drawn in at low cost and then becoming dependent on a small number of providers before facing sustained price increases.

Others are less concerned, arguing that rapid advances in open-source and lower-cost models provide a natural competitive check on pricing power.

Regardless of which view proves correct, the message from industry leaders is that individual-tier subscriptions are more than sufficient for most current use cases, and that fintechs should avoid premature enterprise-level commitments or heavy token-based billing before the value case is proven.

Questions around AI accuracy and reliability also emerge repeatedly

Interestingly, some participants suggest that AI value is inversely proportional to a company's stage of growth. For start-ups and emerging fintechs, AI is largely viewed as an accelerator. Smaller teams can build products faster, test ideas more cheaply and compete above their weight.

For larger organisations, however, the equation becomes considerably more complex. Mature businesses must consider governance, integration with their existing tech stack, regulatory obligations, liability and cyber security.

A sole founder may view the ability to launch a new feature overnight as a competitive advantage. An organisation responsible for customer funds, regulated data and critical infrastructure may see that same capability and hear alarm bells.

As one participant observes:

“Where is the cyber insurance for that?”

Some leaders take an even more cynical view, arguing that the future value of human expertise may increasingly lie in accountability. Financial advice, lending decisions and compliance activities ultimately require someone to take responsibility for outcomes. An AI cannot be held accountable for an error or regulatory breach. A human can.

Governance, guardrails and regulation

AI regulation is still evolving, but technology regularly outpaces legislative action, and fintechs cannot afford to wait. As AI moves from experimentation into production environments, governance is rapidly becoming a board-level issue.

This is particularly significant within financial services, where explainability, auditability and accountability are critical.

 

Data-focused fintechs appear highly conscious of governance, with established privacy, Consumer Data Right (CDR) and security frameworks widely adopted among respondents. Privacy-preserving techniques are also becoming relevant to product roadmaps, although approaches to explainable AI remain uneven, suggesting governance frameworks may currently be more mature than the mechanisms used to make AI models transparent to customers and stakeholders.

Cyber security is also a major concern, as clients increasingly demand assurance that embedded AI does not become a back door.

Multiple organisations adopt explicit rules prohibiting staff from entering sensitive information into public AI systems. Others create ring-fenced environments and cloud architectures to maintain control over data.

When discussing solutions to unreliable outputs, one roundtable participant describes an “AI sausage factory,” where highly trained agents operate in a production line, each layering on their field of expertise, with human checkpoints for quality control and a failsafe that scraps any output containing errors and sends it back to start over from the beginning. This may be an effective way to ensure accuracy but does raise questions about how many tokens it costs to produce a sausage.

 

For fintechs providing business tools and software as a service (SaaS), many already view AI as a bigger competitive threat than traditional rivals.

The new status quo

If every fintech has access to the same AI tools, it can’t be a differentiator. Data, on the other hand, is rapidly increasing in value.

As software becomes easier to build, unique datasets, relationships built on trust, and access to distribution channels will be the most valuable assets of the AI era.

As one leader notes, “many AI businesses are little more than wrappers around existing models, while organisations with access to unique proprietary datasets can create significantly more defensible value.”

This creates an opportunity for stronger collaboration between fintechs and established financial institutions that hold large volumes of proprietary data. Programs such as the Buy Australian AI Partnership Program can help facilitate these connections by bringing together innovators, data holders and potential customers to explore practical AI applications.

It is also a great example of the non-financial support government can provide to foster collaboration, encourage knowledge sharing and create pathways for homegrown innovators to engage with large organisations. We hope to see similar programs conducted in the future.

Of course, the ability to capitalise on this advantage hinges on the quality of information flowing through financial systems. One participant argues that the most important AI challenge is no longer model capability but data integrity itself.

This focus on data quality and accessibility naturally leads to one of the most significant infrastructure discussions in Australian fintech: the future of the CDR.

CDR at a turning point

Only 19% of survey respondents currently use CDR or open banking, though that figure rises to 68% (9/13) of respondents who self-identify as data analytics, information management or “big data” companies.

 However, initially low adoption numbers should not be interpreted as evidence that CDR lacks value. Roundtable participants made it clear that they see the potential in the framework; they just need some of the barriers cleared away first.

Those discussions offer meaningful insight into why initial adoption has been slow as well as the reason for the sector’s recent enthusiasm for open banking.

 

Early criticisms of CDR

Some leaders contend that CDR has been held back by poor initial design.

One participant argues that CDR replicated established bank-feed infrastructure instead of building on it.
“Data sharing already exists. It has existed for 25 years. All open banking needed to do was go to every bank and say, ‘Share your data via an API, do not charge them, and have a digital consent.’ Open banking would have been done in six months.”

Business consent mechanisms via nominated representative arrangements were also highlighted as a significant barrier to CDR adoption. When the consent mechanism obstructs the movement of high-quality bank data, it undermines the very benefits CDR is designed to deliver. Participants want a simpler way for businesses to authorise access to their data.

Others see slow adoption itself as a barrier to realising the full value of CDR.

“We’re great believers that, as a technology, [CDR is] a great enabler for the economy… but if you don’t have the ecosystem of innovating businesses around [these frameworks] and you don’t have the adoption, then it sort of stalls.”

Regulatory delays are also a source of frustration. 

Some describe necessary regulatory reforms being delayed in favour of other legislation, leaving fintechs in limbo.

More than half of surveyed fintechs believe reform is moving too slowly.

Despite these barriers, momentum is shifting.
Participants who work closely with CDR describe the industry as “turning a corner”, with real-world usage finally emerging.

 

Fresh enthusiasm for CDR

For years, fintechs and the major banks were at loggerheads over CDR, with banks resistant to a regime they see as costly and unwelcome. That resistance is giving way to advocacy.

As industrial-scale fraud imposes significant costs across the financial system, banks have opened their eyes to the value of trusted data-sharing frameworks that can strengthen identity verification and risk assessment.

However, the biggest reason banks are changing their tune is the prospect of incorporating Australian Taxation Office (ATO) tax data into CDR. For lenders, this opens the door to independent verification of claimed income and a range of other data points that would sharpen credit decisions considerably.

 

 
 

Roundtable participants also highlight product data as a largely underappreciated Australian success story.

“We reckon we’ve got the best CDR framework, particularly when it comes to product, because we really do.”

Australia now holds a dataset covering up to six years of product changes across more than 100 banks, with close-to 40 non-bank lenders now included. Mandatory product-data sharing commenced on 13 July 2026 for 37 non-bank lenders within scope, subject to exemptions. This differs from the phased rollout of consumer-data obligations commencing in November.

By contrast, the UK applies product reference data to only its top nine banks, and in such a narrow scope that its usefulness is limited. The opportunity now is for government to champion Australia’s standards implementation experience through formal and informal channels. We have a clear opportunity to export our data processing skills, and we absolutely should encourage counterparts in the UK, Canada, and New Zealand to consider product data sharing seriously.

Embedded finance continues to gain momentum

Beyond AI and open banking, embedded finance is also becoming increasingly significant.

Survey results suggest that bank-statement analysis and traditional credit bureau data remain the dominant inputs into lending decisions. However, newer capabilities are beginning to supplement these foundations rather than replace them.
 

 

Around three in ten fintech lenders report using AI and machine learning models, behavioural data and Open Banking/CDR data within their credit decisioning frameworks. 

Traditional data sources remain essential, but richer real-time data streams, advanced analytics and AI-powered decision-making tools increasingly augment them.

 

Chapter takeaway: 

 AI adoption is accelerating, but data and governance will determine long-term value 

AI is now embedded across Australian fintech and accelerating product development, particularly for small or early-stage fintechs. 
However, access to the same tools will not create a lasting competitive advantage. The fintechs best placed to capture long-term value will combine proprietary, high-quality data with strong governance, clear accountability and practical applications that solve genuine customer problems.

Australia’s ability to convert AI adoption into broader economic value will also depend on trusted data-sharing infrastructure. 
Continued reform of the Consumer Data Right, including improvements to data quality, business consent and access to new datasets, can give fintechs stronger foundations on which to innovate and compete.

FinTech Australia
RSM