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Australia's financial services sector is a major contributor to the national economy, with a sophisticated, competitive, and profitable financial sector and a strong regulatory system. The industry is expected to grow over the next five years, with the biggest companies in the market being NAB, Commonwealth Bank of Australia, and Westpac. The country's financial system is robust, with strong capital and liquidity positions, and is well-positioned to support the economy through challenging periods. The evolving financial technology (FinTech) sector is also playing a significant role in shaping the industry, with the Big Four banks expanding their digital offerings to maintain their dominance.
| Characteristics | Values |
|---|---|
| Market size of the finance industry | $473.4 billion in 2025 |
| Number of businesses in the finance industry | 62,481 |
| Growth rate of the finance industry | 6.1% between 2020 and 2025 |
| Largest contributor to the national economy | $140 billion to GDP |
| Global ranking by nominal GDP | 14th |
| Total GDP | $1.98 trillion |
| Percentage of GDP contributed by service sector | 62.7% |
| Percentage of labour force employed by service sector | 78.8% |
| Value of mining industry as percentage of GDP | 8.4% |
| Earnings growth of mining industry | 23.4% ($52 billion) |
| Earnings growth of wholesale trade | 21.9% ($7.9 billion) |
| Earnings growth of retail trade | 16.2% ($6.8 billion) |
| Earnings growth of construction | 11.6% ($6.1 billion) |
| Total creative industries contribution to economy | $122.8 billion in 2016 |
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What You'll Learn
- The financial services sector is the largest contributor to the national economy
- The Big Four banks are ANZ, Commonwealth, NAB, and Westpac
- Home loans are the largest segment of finance in Australia
- The average net worth for Australian households in 2019-20 was $1.04 million
- The FinTech sector will play a big part in the future of the industry
The financial services sector is the largest contributor to the national economy
The financial services sector is Australia's largest contributor to the national economy, contributing around $140 billion to GDP in the last year. The sector has been a significant driver of economic growth, and with 450,000 people employed, it will continue to be a core sector of the economy in the future.
The World Economic Forum's 2012 Financial Development Index rated Australia as one of the world's best-performing financial centres, partly due to its strength in financial intermediation and stability. Australia has a sophisticated, competitive, and profitable financial sector, with a strong regulatory system. The country's four major banks are among the world's largest by market capitalisation, and all rank in the top 25 safest banks globally. They are also some of the most profitable.
The financial sector in Australia includes home loans, business loans, and consumer credit. Home loans are the largest segment, spurred by government initiatives and demand. The finance subdivision covers firms providing banking, finance, and investment trust services. The most significant industries within this include domestic banks, foreign banks, non-depository financiers, and financial asset investors.
The future of the financial services sector in Australia looks bright, with the FinTech sector expected to play a significant role in its growth and development. The increasing rate of technological change, mobile device penetration, and shifting customer preferences will dramatically impact the structure and delivery of financial services. This trend is already evident in the country, with Australians increasingly engaging with their banks through ATMs, online transactions, and mobile services.
The Big Four banks are expanding their digital offerings to combat competition and maintain their market dominance. With the number of online banking users growing, banks will need to keep pace with technological developments and the evolving FinTech industry.
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The Big Four banks are ANZ, Commonwealth, NAB, and Westpac
Australia's financial services sector is a significant contributor to the national economy, contributing approximately $140 billion to the GDP in the last year. The sector employs around 450,000 people and is expected to remain a core part of the country's economy in the future. Australia's financial system is robust, and its FinTech sector is poised to play a pivotal role in driving innovation and growth.
The "Big Four" banks in Australia are ANZ, Commonwealth (also known as CommBank), NAB, and Westpac. These banks have historically dominated the country's banking industry in terms of market share, revenue, and total assets. They are among the largest banks in the world by market capitalization and rank in the top 25 globally for the safest banks. The emergence of the "Big Four" can be traced back to the 1980s, when a series of acquisitions and mergers propelled them to the forefront of the industry. During the early 2000s' housing boom, their position was further solidified as they held a growing number of mortgage loans.
The "Big Four" banks control more than 80% of all loans from mortgage borrowers, and their market share has expanded over the years. Despite this oligarchical market structure, consumers have expressed high levels of satisfaction with these banks, which offer savings account interest rates above the current cash rate. The subsidiaries of these banks also dominate the banking sector in New Zealand. For example, ANZ Bank New Zealand, a subsidiary of the Australia and New Zealand Banking Group, is the largest bank in New Zealand by profit.
While the "Big Four" banks in Australia are incredibly influential, they do not always offer the highest interest rates available. For instance, Rabobank's High-Interest Savings Account surpasses the leading rate offered by the "Big Four." Additionally, these banks have specific conditions that customers must meet to receive their advertised rates. Nevertheless, the "Big Four" banks in Australia remain a powerful force in the country's financial landscape, contributing to its overall stability and strength.
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Home loans are the largest segment of finance in Australia
The financial services sector in Australia is a major contributor to the national economy, adding around $140 billion to the GDP in the last year. The sector is robust, with a strong regulatory system, and is a core driver of economic growth.
There are a variety of home loan options available in Australia, including loans from banks and non-bank lenders. The big four banks in Australia are CommBank, Westpac, NAB, and ANZ, and they are among the world's largest and safest financial institutions. However, smaller banks and non-bank lenders can often offer more competitive rates on home loans to attract customers.
The process of applying for and managing home loans has been transformed by the digital revolution. Fintech has opened up new avenues for customers to explore, and online transactions and mobile services have largely replaced in-branch interactions. This shift is expected to continue, with technological advancements and changing customer preferences influencing the structure and delivery of financial services.
Home loans are a significant financial commitment for Australians, with a typical loan term of 25 to 30 years and regular repayments accruing interest. The interest rate is a key factor in the cost of a home loan, but other factors such as upfront and ongoing fees should also be considered when choosing a loan. Canstar, a financial comparison platform, assesses over 3,000 mortgages from more than 80 providers across Australia to help customers find the best loan for their needs.
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The average net worth for Australian households in 2019-20 was $1.04 million
The financial services sector in Australia is a major contributor to the national economy, and it is the largest sector in terms of economic contribution. The sector has been a key driver of economic growth, employing 450,000 people. Australia's financial system is robust, with strong regulatory oversight and some of the world's largest and safest banks.
In the 2019-20 financial year, the average net worth for Australian households was $1.04 million. This figure represents the value of all assets owned by a household, including property, superannuation, vehicles, and investments, minus any liabilities or debts. This net worth figure saw no statistically significant change from the previous year, with a slight decrease from $1.05 million in 2017-18. However, compared to a decade earlier, this figure represents a notable 19% increase.
During this period, the average total liabilities for households increased significantly, rising from $189,500 in 2017-18 to $203,800 in 2019-20. This increase in liabilities contributed to a higher debt burden, with three out of four households carrying debt in 2019-20. Additionally, the average equivalised disposable household income was $1,124 per week, a slight increase from the previous year but a more significant increase compared to a decade earlier.
While the average net worth provides a snapshot of the financial position of Australian households, it is important to recognize that wealth distribution in Australia is uneven. The bottom 20% of the population holds a disproportionately small share of the wealth, while older Australians tend to have higher net worth than younger households. Despite these disparities, Australia generally exhibits more evenly distributed wealth compared to other wealthy nations.
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The FinTech sector will play a big part in the future of the industry
Australia's financial services sector is a major contributor to the national economy, adding around $140 billion to the GDP in the last year. The country's financial system is robust, and the government's actions in response to the Financial System Inquiry will further enhance its ability to respond to future challenges and opportunities. The FinTech sector will play a significant role in this regard.
The rate of technological change is accelerating, and mobile device usage is becoming more prevalent, coupled with evolving customer preferences. These factors will significantly impact how financial services are structured, delivered, and consumed. Australians' engagement with banks has already undergone a significant shift, with ATMs, online transactions, and mobile services largely replacing traditional in-branch interactions.
The future of the financial industry in Australia holds promise for the FinTech sector. The country's financial technology industry has a strong foundation, with a $45 billion fintech market that is particularly strong in payments, middle and back-office systems, neobanks, blockchain, and regtech. The sector has a highly skilled and multilingual technology workforce, and Australia's global success in fintech is evident through the creation of hundreds of globally popular products.
The Australian government actively supports the development of the FinTech industry. Initiatives such as the 2018 UK-Australia FinTech Bridge and the 2022 Australia-Singapore FinTech Bridge aim to foster collaboration and cooperation in fintech development and financial regulation. Additionally, the country's regulatory sandbox, led by the Australian Securities and Investment Commission, facilitates financial innovation.
The FinTech sector in Australia is dynamic and robust, with a rapid uptick in the establishment of new companies, increasing investments, and a growing demand for tech-integrated solutions. The country's innovation-friendly regulatory framework, such as APRA and ASIC, will attract institutional capital from across the globe, fueling further growth. The market consolidation trend, with larger players acquiring smaller fintechs, has contributed to a more sustainable landscape, and the payments sector continues to lead the Australian fintech space in terms of the number of firms and investment value.
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Frequently asked questions
Australia's financial services sector contributed around $140 billion to the GDP in the last year.
The biggest financial companies in Australia are NAB, Commonwealth Bank of Australia, Westpac, and ANZ Bank.
The Australian financial system is resilient and well-positioned to support the economy through challenging periods. The industry is expected to grow over the next five years, with the FinTech sector playing a significant role in driving innovation and creating lasting jobs.
