Strategic Examination of Research and Development: discussion paper

FinTech Australia
Level 5, 11 York Street
Sydney, NSW 2000
Department of Industry,
Science and Resources,
GPO Box 2013,
Canberra ACT 2601

Via email: RDReview@industry.gov.au

RE: FinTech Australia – Feedback on Strategic Examination of R&D

FinTech Australia welcomes the opportunity to provide feedback on the Department of
Industry, Science and Resources’ Strategic Examination of Research and Development: discussion paper. As the peak industry body representing Australia’s fintech sector, we support the intent of this review to develop a more integrated, impactful and forward-looking national R&D system. We see this as a timely and important opportunity to modernise policy frameworks and better recognise the diverse ways in which innovation occurs across Australia’s economy.

About FinTech Australia

FinTech Australia is the peak industry body for the Australian fintech sector, representing more than 400 fintech companies and startups across Australia. As part of this, we work with a range of businesses in Australia’s fintech ecosystem, including fintechs engaging in payments, consumer and SME lending, wealthtech and neobanking, the consumer data right and the crypto, blockchain and Web3 space. Our vision is to make Australia one of the world’s leading markets for fintech innovation and investment. FinTech Australia regularly contributes to consultation processes and makes submissions on specific regulatory matters and proposals.1

1 https://www.fintechaustralia.org.au/policysubmissions
Our Submission

FinTech Australia welcomes the opportunity to provide this submission to the Strategic
Examination of Research and Development (R&D). We believe a high-performing, future-facing R&D system is central to Australia’s global competitiveness, economic resilience, and technological sovereignty. The current review presents a timely opportunity to modernise policy frameworks, rebalance incentives, and better enable innovation across the full spectrum of emerging and high-growth industries including fintech, regtech, digital identity, payments and AI-enabled financial services.

In providing this submission, we draw on insights from across the fintech ecosystem and previous FinTech Australia’s submission. We acknowledge that while the R&D system has historically supported discovery-led research and capital-intensive industries well, it has not always aligned with the needs of fast-growing digital sectors. We welcome the opportunity to work with government and research institutions to help shape a system that is more accessible, inclusive, and responsive to the full range of innovation occurring in Australia today.

Importantly, the R&D system must be accessible to all types of innovators including startups and SMEs, which frequently act as the earliest adopters and most agile developers of new technology. A disproportionate share of breakthrough financial innovation in recent years has emerged from fintech companies working within short funding cycles, limited compliance resourcing, and the need to demonstrate tangible consumer outcomes. An inclusive R&D framework must provide fit-for-purpose support to these innovators, including simplified access to funding, eligibility settings that recognise digital and compliance-led development, and early engagement with regulators to enable safe deployment.
Consultation questions

1. What should an integrated, sustainable, dynamic and impactful Australian R&D
system look like?

Australia’s future economic resilience and global competitiveness depend on the strength and adaptability of its research and development system. FinTech Australia submits that an integrated, sustainable, dynamic and impactful R&D system must be designed to reflect the way innovation is delivered in practice today, particularly in knowledge-intensive and digital-first industries like fintech. A system that continues to focus too narrowly on traditional, capital-intensive R&D models will fall short of its potential to support Australia’s broader innovation economy2.

An integrated R&D system should be underpinned by active collaboration across research institutions, industry, government and the investment community. This means removing structural barriers to cooperation and embedding co-design, co-funding and joint delivery models across the innovation lifecycle. High-performing international jurisdictions offer valuable lessons in this regard. The Netherlands’ high tech center and R&D ecosystem initiative3, for example, hosts more than 300 companies and research institutions on a single campus, with public infrastructure and funding intentionally structured to support integration and shared capability. Similarly, Israel’s long-standing success in technology commercialisation has been underpinned by deliberate policy and funding alignment across research, venture capital and state institutions supported by a consistent public R&D investment exceeding 5% of GDP4. These systems enable research excellence to translate directly into new products, startups, and jobs. Adopting similar policies could enhance
Australia's R&D landscape.

To be sustainable, Australia’s R&D system must provide long-term confidence for businesses to invest, collaborate and scale. This requires stable and predictable policy settings that allow participants, particularly small and early-stage companies to plan and allocate resources with confidence. Our previous submissions from our members reported that frequent changes in eligibility interpretation under key support schemes such as the

2
E.g. Australia’s R&D system must accommodate both capital-intensive innovation (e.g. manufacturing) and digitally-enabled innovation (e.g., fintech, AI).
3
HighTech Campus Eindhoven, ‘About High Tech Campus Eindhoven’, www.hightechcampus.com

22
E.g. New Product Sales ÷ R&D Spending = How efficient your innovation spending is.
generated from those new products23. These indicators may provide a clearer view of how effectively innovation investment is translating into commercial success.

FinTech Australia recommends that a modern R&D impact framework should assess value across three interrelated dimensions: commercialisation outcomes, societal benefit, and system-level contribution. These dimensions reflect a more complete picture of innovation performance, one that recognises knowledge creation, economic utility, and system readiness for future challenges.

1. Commercialisation and economic outcomes - Australia should prioritise tracking the
extent to which R&D activities lead to tangible outcomes in the market. These
include:
● New products, services, and platforms derived from research.
● Revenue growth, productivity improvements, and job creation in high-growth
sectors.
● Participation of startups and SMEs in R&D collaborations.
● Increases in exportable technology or services, particularly in digital finance.

In the fintech sector, impact should also be assessed through indicators such as:

● Adoption rates by consumers or businesses.
● Improvements in risk management, compliance efficiency, or cyber resilience.
● Contributions to infrastructure interoperability (e.g. APIs, digital identity
layers).

2. Societal and policy impact - R&D measurement should also capture public value
and alignment with national priorities. Suggested indicators include:
● Contribution to financial inclusion, consumer protection, or scam prevention.
● R&D-informed regulatory or policy reform (e.g. improvements to data
standards or ethical AI use).
● Solutions addressing broader societal challenges such as digital equity,
economic participation, or climate adaptation.
● Engagement with underrepresented communities or regions.

23
E.g. Gross Margin from New Products ÷ New Product Sales = Whether those innovations are commercially successful and profitable.
Innovation that supports better decision-making, more efficient government
services, or improved public trust particularly in sectors like fintech should be
explicitly recognised within Australia’s R&D measurement framework.

3. System-level performance and collaborative readiness - An effective R&D system
requires not only knowledge generation, but the institutional capability and
cross-sector alignment to translate ideas into outcomes. To measure this, Australia
should track:
● Industry–research collaboration rates, including SME and startup
participation.
● Researcher mobility between academia, government, and the private sector.
● Open infrastructure contributions (e.g. APIs, digital sandboxes, open-source
frameworks).
● Adoption of research outputs by regulators, standards bodies, or industry
associations.

R&D Tax Incentive (RDTI) reduce certainty and deter investment. Likewise, the absence of 5 targeted, multi-year grant programs for digital and software-based R&D remains a key gap in Australia’s innovation policy mix. A sustainable R&D system must actively support innovation in non-physical, intangible and compliance-led areas including data analytics, regtech, privacy-preserving technologies, and AI-enabled product development.
Further, In line with transformative innovation policy , a dynamic R&D system must also be 6 responsive to emerging technologies, evolving consumer needs, and national priorities. In an evolving sector such as fintech, innovation often takes the form of iterative experimentation, user testing, and agile product delivery rather than discrete lab-based breakthroughs. Policy frameworks must be capable of supporting this style of R&D, which is essential to advance industries that utilise Consumer Data Right, building secure digital identity infrastructure, delivering safe and responsible AI, and modernising financial infrastructure. Australia’s ability to adapt its innovation frameworks to support these technologies will be vital to its continued leadership in areas such as real-time payments, open banking, and digital finance. The United States and China , for instance, has 7 maintained a dynamic R&D environment by investing in innovation hubs with strong industry participation and by embedding commercialisation metrics into research funding schemes enabling faster transitions from concept to market. Impact must remain the defining measure of Australia’s R&D success. This includes not only technological or scientific breakthroughs, but also the extent to which R&D improves economic participation, trust in digital systems, and consumer outcomes. As the World Intellectual Property Organisation noted in its Global Innovation Index (2023), global R&D spending has nearly tripled since 2000, now exceeding USD 2.75 trillion . The countries 8 achieving the greatest return on investment are those that combine robust research capability with a high degree of commercial translation, product development, and service innovation. Australia’s R&D strategy must likewise prioritise the conditions that enable real-world impact from streamlined regulatory pathways and commercial incentives, to public procurement that rewards Australian-developed solutions. 8 Ibid. 7 World Intellectual Property Organisation, ‘End of Year Edition – against All Odds, Global R&D Has Grown close to USD 3 Trillion in 2023’, global-innovation-index (2024) . 6 Schot, Johan and W Edward Steinmueller, ‘Three Frames for Innovation Policy: R&D, Systems of Innovation and Transformative. Change’ (2018) 47(9) Research Policy 1554 . 5 See response to Question 9 for further detail on the R&D Tax Incentive and its role in shaping business investment decisions.

Key Observations from the 2024-25 R&D Budget
The Australian Government has allocated an estimated $14.4 billion to research and development (R&D) for the 2024–25 financial year . This includes $4.3 billion in industry 9 R&D tax measures and $10.1 billion in other budgetary allocations, representing a 4.7% nominal increase from the previous year . However, R&D investment as a proportion of 10 GDP remains at 0.52%, which is below the 2021 OECD average of 0.74% . 11

Recommendations for an Integrated, Sustainable, Dynamic, and Impactful R&D System
Based on the above observations, the following recommendations are proposed:
1. Increase R&D Investment Relative to GDP To align with OECD standards and ensure long-term sustainability, Australia should aim to increase its R&D investment as a proportion of GDP. This requires not only boosting funding but also implementing policies that encourage private sector investment in R&D. Achieving this requires not only boosting direct public funding, but also strengthening policy mechanisms like the Research and Development Tax Incentive (RDTI) that encourage private sector investment. In particular, the RDTI should be refined to better reflect and reward the types of innovation occurring in high-growth, digital-first sectors such as fintech, regtech, and emerging AI-enabled industries.
2. Foster Cross-Sector Collaboration Encouraging partnerships between industry, academia, and government can enhance the integration of the R&D system. Collaborative initiatives can facilitate the translation of research into practical applications, driving innovation and economic growth.
3. Support Emerging and Transformative Technologies Allocating resources to emerging fields such as artificial intelligence, quantum computing, and renewable energy can position Australia at the forefront of technological advancement. Supporting transformative innovation policies that address societal challenges can make the R&D system more dynamic and impactful. 11 Ibid. 10 Ibid. 9 Department of Industry, Science and Resources, ‘What Do the Latest SRI Budget Tables Mean for Australian R&D and Innovation?’, Industry.gov.au (22 December 2024) .
4. Enhance Accessibility for Startups and SMEs Simplifying access to R&D funding and support mechanisms for startups and small to medium-sized enterprises (SMEs) can stimulate innovation across the economy. Tailored programs and incentives can empower these entities to contribute significantly to the R&D landscape.

2. What government, university and business policy settings inhibit R&D and innovation?
A number of longstanding government, institutional, and policy settings continue to 12 constrain R&D and innovation activity in Australia particularly within high-growth, digitally enabled industries such as fintech. These constraints operate across both structural and operational levels and, unless addressed, risk undermining Australia’s global competitiveness and its ability to foster a thriving, modern innovation ecosystem.
While the RDTI is a core policy instrument intended to incentivise business investment in R&D, its effectiveness in supporting software and digital innovation is increasingly limited. In practice, current eligibility guidance does not adequately recognise the iterative, user-driven, and compliance-oriented nature of R&D that underpins much of the innovation within fintech. This has a chilling effect on investment in R&D-intensive product development and undermines confidence in the policy as a reliable support mechanism.
More broadly, Australia’s public R&D funding architecture remains skewed toward capital-intensive, physical sciences and manufacturing-based projects, with comparatively limited support for digital or services-based innovation. Grant programs are often designed with traditional research institutions or large corporations in mind, requiring long lead times, extensive co-funding, and administrative capacities that are incompatible with the operating models of startups and scaleups. These design choices disproportionately exclude smaller, fast-moving businesses from accessing public innovation support.
In parallel, collaborative pathways between universities and industry remain underdeveloped, especially for SMEs and digitally native firms. Australia has long trailed its OECD peers in university-business collaboration rates, and despite a number of targeted initiatives, structural barriers remain. These include academic KPIs that reward publication over impact, and a lack of standardised models for co-designing industry-relevant research.

12 E.g. fragmented government support, regulatory uncertainty or lag in certain payment, lack of long term innovation strategy.

For fintechs seeking to commercialise research, access specialised talent, or validate new technologies, these challenges often make formal collaboration with the higher education sector prohibitively complex or unviable.
Public programs such as the National Reconstruction Fund (NRF) hold promise but must be designed with accessibility in mind. In particular, it will be critical that the NRF supports a broad range of high-growth industries, including fintech, and not just traditional sectors. Fintechs often deliver public benefit by improving access to credit, enhancing digital trust, and reducing cost-of-living pressures outcomes that align squarely with national policy goals. To exclude these firms from access to long-term patient capital would be a missed opportunity.
These insights are echoed in FinTech Australia’s most recent engagement with industry. In two member surveys conducted in April 2025 , our members consistently identified 13 funding mechanisms and the operation of R&D incentives as top priorities for reform.
Figure 1: Priority Areas for Government Support (%)

Source: FinTech Australia’s Internal Member Survey (Apr 2025). 1

3 Australian Fintech Industry Survey Dashboard and Australian Fintech Industry Survey Analysis. Based on responses from 87 fintech companies. In our survey, many fintechs highlighted the need for streamlined grant programs, clearer eligibility guidance under the RDTI, and more accessible pathways to secure government-backed funding or matched capital. Without reform, Australia risks inhibiting innovation in areas that are central to building a competitive, inclusive, and digitally enabled economy.

3. What do we need to do to build a national culture of innovation excellence, and engage the public focus on success in R&D and innovation as a key national priority?
Building a national culture of innovation excellence requires deliberate and sustained effort to broaden both the understanding and visibility of innovation across Australian society. This begins with rethinking the prevailing narrative one that too often limits innovation to laboratory-based discovery or research-intensive institutions. While these remain important, the full spectrum of innovation activity now spans software development, data infrastructure, service design, and digitally enabled business models, particularly in high-growth sectors such as fintech, regtech, cyber security and AI. FinTech companies, in particular, are delivering highly tangible and widely distributed benefits to Australian consumers. They are helping households reduce debt, access more transparent and competitive credit products, manage rising costs of living, and better protect themselves from scams. They are building the digital rails that support real-time payments, enhance open banking, and enable more inclusive financial services. Yet despite these outcomes, the contribution of fintechs and other software-driven innovators is frequently overlooked in public discourse around R&D, innovation, and productivity. To embed innovation more deeply into Australia’s national identity, the government must play a central role in elevating these contributions and signalling that innovation is a core pillar of economic and social policy. This involves embedding innovation objectives across all portfolios and positioning innovation not just as a scientific endeavour, but as a tool of national renewal. It also requires better integration between innovation, industry, and productivity policy, to ensure that R&D is not siloed from commercial and consumer outcomes. Public investment strategies can reinforce this narrative by supporting mission-led programs that target clearly defined societal challenges such as financial well being, financial wellbeing, digital inclusion, and climate resilience. These programs should be designed in a way that enables participation from a broad range of actors, including startups and SMEs, and recognise the role of software, data, and compliance innovation in delivering impact. Australia should also build capacity to identify, measure and communicate the public value of innovation, including through improved metrics, case studies, and community engagement. A culture of innovation cannot be created by the government alone. However, public policy can send clear signals that innovation is not a niche activity, but a mainstream national priority one that is central to Australia’s prosperity, resilience, and fairness in a rapidly digitising economy.

4. What types of funding sources, models and/or infrastructure are currently missing or should be expanded for Australian R&D?
To fully realise the economic and societal benefits of research and development, Australia must broaden the scope of its R&D support infrastructure and funding mechanisms to better reflect the needs of digitally enabled industries, emerging technologies, and high-growth business models. While Australia has a solid foundation in public research funding and the R&D Tax Incentive, the system remains heavily weighted toward traditional R&D typologies and lacks the diversity, flexibility and responsiveness needed to drive innovation across the full spectrum of the economy particularly for startups and scaleups in sectors such as fintechs. Fit-for-purpose grant models for digitally native sectors There is an urgent need to expand grant-based funding programs that are tailored to the needs of software-led and services-based innovation. Most existing grants are better suited to physical product development or long-horizon research projects, with limited mechanisms to support agile, fast-cycle experimental development. Commercialisation capital for early and mid-stage ventures While later-stage venture capital has grown in Australia, early-stage commercialisation funding particularly between proof-of-concept and product-market fit remains scarce. The absence of targeted, risk-tolerant capital creates a “valley of death” for companies seeking 14 14 See Committee for Economic Development of Australia, ‘Bridging the commercialisation valley of death’, Media Release, 2 August 2015, www.ceda.com.au/NewsAndResources/News/Economy/Bridging-the-commercialisation-valley-of-death. to translate technical capability into viable business models. Expanding Australia’s National Reconstruction Fund to include more accessible, sector-agnostic commercialisation capital inclusive of fintech and digital services may also help fill this gap. Broader support for collaborative and translational infrastructure Australia lacks sufficient collaborative infrastructure to facilitate translational research and industry–academia engagement in fast-moving sectors . Regulatory sandboxes, shared 15 digital testing environments, synthetic datasets and real-time product validation platforms are essential for safe experimentation in sectors like fintech. Investment in these forms of infrastructure whether delivered through national capability hubs or embedded within universities would improve trust, reduce regulatory friction, and accelerate time-to-market for critical technologies. Targeted support for underrepresented R&D actors The current funding landscape does not adequately support certain classes of innovators including SMEs fintechs, indigenous-led startups, and social-impact focused digital ventures. Funding programs should be expanded or adapted to enable participation from these groups, including through simplified application processes, alternative eligibility criteria (e.g. for in-kind contributions), and outreach to sectors historically excluded from mainstream R&D support. Expanding eligibility for existing incentives and exploring complementary reform to encourage SME-led R&D would directly support growth in emerging sectors and new business models.

5. What changes are needed to enhance the role of research institutions and businesses (including startups, small businesses, medium businesses and large organisations) in Australia’s R&D system?
Enhancing the contribution of research institutions and businesses to Australia’s R&D system requires a shift away from traditional models of collaboration and a move towards more agile, industry-aligned engagement frameworks. While Australian universities and publicly funded research agencies (PFRAs) are global leaders in research output, the translation of that capability into commercially and societally impactful innovation remains a systemic weakness. The OECD has consistently ranked Australia near the bottom for
15 Industry Innovation and Science Australia, Barriers to Collaboration and Commercialisation (2023)
university–industry collaboration, despite strong public investment in higher education research. Startups and scaleups, particularly in high-growth, digitally enabled sectors such as fintech face significant barriers when seeking to partner with research institutions. These businesses often operate on tight product development cycles, limited funding runways, and lean internal teams. Rigid expectations around co-funding, publication timelines, and the absence of standardised IP arrangements often mean that the path of least resistance is to build independently or offshore partnerships entirely. To address this, policy and institutional reform should focus on simplifying the structures that govern collaboration, while expanding the range of mechanisms available to support engagement between research institutions and businesses of all sizes .
16 Research institutions should also be encouraged and incentivised to measure their impact through broader innovation metrics, including technology commercialisation, startup creation, contribution to public infrastructure, and support for national missions.
This will require shifts in internal incentive structures, including academic promotion criteria, and stronger integration between national research priorities and sector-specific needs. As the fintech sector continues to evolve and intersect with priority policy areas such as financial resilience, competition, privacy, and scam prevention, the opportunity for mutually beneficial collaboration between research and industry has never been stronger. Unlocking this potential will not only improve the inclusiveness and effectiveness of the national R&D system, it will also accelerate the translation of Australia’s research strengths into tangible economic, social and regulatory outcomes.

6. How should Australia support basic or ‘discovery’ research? Basic or ‘discovery’ research is the foundation of a healthy and future-facing innovation system. It expands the frontier of knowledge, generates long-term intellectual capital, and underpins the development of entirely new technologies, industries, and ways of thinking. For Australia to remain globally competitive and resilient in the decades ahead, it must maintain a strong commitment to curiosity-led research. For sectors like fintech, the links between basic research and downstream innovation are real but often underappreciated.
16 E.g. Recognition of in-kind contributions from industry partners, such as access to data, customer cohorts, regulatory expertise, or technical infrastructure, in lieu of financial co-contributions.
Foundational research in finance technology, Consumer Data Right, network design, behavioural economics, machine learning, and algorithmic bias has shaped how fintech companies develop secure, trustworthy, and inclusive financial products. Similarly, research in ethics, regulation, and human-computer interaction now plays an increasingly central role in the design of open banking platforms, digital identity frameworks and AI-powered financial tools. To maximise the impact of discovery research, recommendations could look as such: ● Align a portion of discovery research funding with national missions and long-horizon challenges, such as digital trust, financial resilience, cyber security, and data stewardship. ● Create more visible pathways between basic and applied research, including through early-stage commercialisation hubs, regulatory testbeds, and industry-academic partnerships that allow exploratory research to evolve into tangible applications. Importantly, supporting basic research should not come at the expense of applied and experimental development. Both are essential pillars of a modern R&D ecosystem. Australia must avoid treating discovery and commercialisation as separate endeavours; rather, it should fund and incentivise a continuum of activity that begins with exploration and leads to real-world outcomes. A renewed commitment to basic research, matched with stronger integration across disciplines and industry, will position Australia not only to generate knowledge but to lead in turning that knowledge into global public goods, exportable technologies, and inclusive innovation.

7. What should we do to attract, develop and retain an R&D workforce suitable for Australia’s future needs?
Australia’s future competitiveness in the global innovation economy will depend not only on investment in research and technology, but on the strength, diversity, and adaptability of its R&D workforce. As emerging industries including fintech, artificial intelligence, quantum computing, cyber security, and climate technology become more central to national growth, the skills profile and career pathways of Australia’s R&D professionals must evolve accordingly. This requires a deliberate national strategy to attract, develop and retain talent across the entire innovation value chain from discovery and experimentation to commercialisation, regulatory engagement, and product development. While Australia has made welcome progress in expanding skilled migration pathways and funding domestic initiatives to support talent development including through STEM education programs, innovation precincts, and research fellowships these measures have not fully resolved industry-wide workforce challenges. In FinTech Australia’s recent internal surveys, members consistently reported that talent acquisition and talent development remains a critical constraint, particularly for roles at the intersection of product, technology, and regulatory innovation. These shortages are most acute in fintechs where competition for talent is global and demand is rising across multiple sectors simultaneously. Addressing these gaps will require going beyond foundational investment in education or migration and ensuring that R&D workforce policies are tightly aligned with current and future industry needs. Countries such as the UK and Canada have developed structured, 17 18 mission-oriented programs to facilitate this kind of cross-pollination helping to build deep capability in commercially relevant fields while expanding career pathways for R&D professionals. In addition to technical depth, Australia’s future R&D workforce will need broader competencies in areas such as commercialisation, regulatory navigation, design thinking, and ethical decision-making especially in sectors like fintech where innovation occurs within highly regulated environments and often involves public-facing infrastructure. Australia must also maintain its international competitiveness in talent attraction. Without measures to attract talents, high-growth sectors like fintech risk losing talent to jurisdictions with more attractive and integrated innovation ecosystems.

8. How can First Nations knowledge and leadership be elevated throughout Australia’s R&D system?
Elevating First Nations knowledge and leadership within the national R&D system is also important to building a more inclusive, culturally grounded, and globally distinctive innovation ecosystem. Australia’s First Nations peoples possess rich and enduring systems
18 See Canada’s Mitacs program.
17 See UK’s Industrial Strategy Challenge Fund.
of knowledge that span land management, ecological science, health, governance, and cultural practice — systems that continue to offer valuable insights for contemporary research and innovation. Yet historically, these knowledge traditions have been marginalised or excluded from the formal structures of research funding, priority setting, and leadership. Supporting meaningful First Nations participation must go beyond symbolic recognition or engagement at the margins. Building a resilient and future-ready R&D workforce must also mean ensuring that it reflects the diversity of Australian society. Targeted efforts to improve gender equity, support for First Nations researchers, and inclusion of individuals from non-traditional and interdisciplinary backgrounds may broaden access to talent, strengthen innovation outcomes, and contribute to a more inclusive national R&D culture.

9. What incentives do business leaders need to recognise the value of R&D investment, and to build R&D activities in Australia?
Business leaders are more likely to prioritise R&D investment when government policy settings provide clear, timely and reliable signals that such investment will be supported — particularly in sectors characterised by rapid iteration and regulatory complexity. Access to targeted incentives can meaningfully shift the decision-making calculus, especially for startups and high-growth firms weighing whether to undertake new product development, build in-house capability, or expand operations onshore. The Research and Development Tax Incentive (RDTI) is the most material and widely used mechanism in this regard. It plays a pivotal role in shaping business leaders’ willingness to invest in R&D and, critically, in determining whether that investment occurs in Australia. For fintechs, where innovation often involves novel data applications, new regulatory infrastructure, or AI-enabled services, the RDTI is a key driver of early-stage experimentation and long-term product viability. According to the 2022 EY FinTech Australia Census , 95% of respondents agreed that access to R&D incentives increases the likelihood 19 of maintaining their business onshore. The majority of fintechs accessing the incentive reported that it improves business sustainability (79%), influences decisions to conduct R&D locally (77%), and encourages Australian-based operations (72%).
19 FinTech Australia and EY, ‘Fintech Australia Census Report 2022’, Ey.com (2022)
However, the current administration of the RDTI introduces avoidable friction into these business decisions. The eligibility criteria, particularly as applied to software development, are difficult to navigate and commonly require specialist input to interpret. This creates additional cost, complexity and risk, particularly for companies operating in fast-moving environments. Uncertainty around offset timing can also affect liquidity and risk appetite. These factors combine to reduce the overall confidence that business leaders have in the system, dampening its intended policy effect. We acknowledge recent efforts to provide early certainty through initiatives such as ‘advance findings’. However, there is an opportunity to improve the incentive’s effectiveness by further clarifying eligibility settings, streamlining the application process, and accelerating offset payment timelines. These reforms would enhance the RDTI’s standing as a trusted, accessible and commercially meaningful incentive, helping ensure R&D investment remains a strategic priority for business leaders and continues to occur onshore.

10. What should be measured to assess the value and impact of R&D investments?
Most R&D teams across sectors lack clear mechanisms for tracking and communicating progress effectively . To ensure that R&D investments are delivering meaningful outcomes 20 for the economy and society, Australia must adopt a broader and more outcomes-oriented approach to measurement. Traditional metrics such as research publications, patent filings, and overall expenditure remain important, but they do not capture the full value created by R&D, particularly in service-based and digitally native industries such as fintech. Recent international work by McKinsey & Company has highlighted the importance of 21 shifting away from input-heavy innovation metrics (such as patent counts or total R&D spend) toward outcome-oriented measures that assess the real economic impact of R&D activity. In particular, McKinsey proposes two simple but powerful conversion metrics: (1) the ratio of new-product sales to R&D expenditure , and (2) the ratio of gross margin
22 22 E.g. New Product Sales ÷ R&D Spending = How efficient your innovation spending is. 21 McKinsey & Company, ‘Metrics for Measuring Innovation | McKinsey’, www.mckinsey.com (2018)
20 Brennan, Tom et al, ‘Building an R&D Strategy for Modern Times’, McKinsey & Company (3 November 2020) .

generated from those new products . These indicators may provide a clearer view of how 23 effectively innovation investment is translating into commercial success. FinTech Australia recommends that a modern R&D impact framework should assess value across three interrelated dimensions: commercialisation outcomes, societal benefit, and system-level contribution. These dimensions reflect a more complete picture of innovation performance, one that recognises knowledge creation, economic utility, and system readiness for future challenges.
1. Commercialisation and economic outcomes - Australia should prioritise tracking the extent to which R&D activities lead to tangible outcomes in the market. These include:
● New products, services, and platforms derived from research.
● Revenue growth, productivity improvements, and job creation in high-growth sectors.
● Participation of startups and SMEs in R&D collaborations.
● Increases in exportable technology or services, particularly in digital finance. In the fintech sector, impact should also be assessed through indicators such as:
● Adoption rates by consumers or businesses.
● Improvements in risk management, compliance efficiency, or cyber resilience.
● Contributions to infrastructure interoperability (e.g. APIs, digital identity layers).

2. Societal and policy impact - R&D measurement should also capture public value and alignment with national priorities. Suggested indicators include:
● Contribution to financial inclusion, consumer protection, or scam prevention.
● R&D-informed regulatory or policy reform (e.g. improvements to data standards or ethical AI use).
● Solutions addressing broader societal challenges such as digital equity, economic participation, or climate adaptation.
● Engagement with underrepresented communities or regions. 23 E.g. Gross Margin from New Products ÷ New Product Sales = Whether those innovations are commercially successful and profitable. Innovation that supports better decision-making, more efficient government services, or improved public trust particularly in sectors like fintech should be explicitly recognised within Australia’s R&D measurement framework.
3. System-level performance and collaborative readiness - An effective R&D system requires not only knowledge generation, but the institutional capability and cross-sector alignment to translate ideas into outcomes. To measure this, Australia should track:
● Industry–research collaboration rates, including SME and startup participation.
● Researcher mobility between academia, government, and the private sector.
● Open infrastructure contributions (e.g. APIs, digital sandboxes, open-source frameworks).
● Adoption of research outputs by regulators, standards bodies, or industry as