Technological innovation and new sustainable business practices are currently disrupting the Australian economy and emerging as new industries. These technological innovations include renewable energy, blockchain, biotechnology and artificial intelligence. The sustainable business practices particularly affect the construction, transport and livestock farming industries as they work to achieve net zero carbon emissions. These emerging industries are generally new and small, but they are fast growing and appear to have a competitive edge over the incumbent industries.
Emerging Industries:
- Blockchain and fintech
- Zero carbon energy
- Battery manufacturing
- Biotechnology
- Cybersecurity
- Artificial Intelligence
- Sustainable Construction
- Neobanks
- Mini-livestock/Insect farming
- Social Media Marketing
Commonly known for its use in the fast-growing cryptocurrency exchange industry, blockchain technology allows for digital record-keeping on an often decentralised, distributed ledger. As a result, these records cannot be altered, creating a more secure and transparent transaction history. Blockchain is part of a broader group of emerging industries that fall under the general heading of fintech (financial technology).
Blockchains have helped create a lower risk environment for emerging industries in the peer-to-peer (P2P) lending space, including for personal loans and vehicle rental. P2P vehicle rental offers individuals greater convenience, particularly for those that only require temporary transport. As more people move to inner cities, and as individual environmental consciousness rises, more Australians will forgo owning a vehicle outright. This trend will likely make P2P rentals more popular. Furthermore, blockchain technology, with its decentralised and unalterable records, will alleviate fears around payment fraud and vehicle security.
Fintech also includes the Buy Now Pay Later (BNPL) industry. US-based multinational Block, Inc. recently acquired the Australian BNPL firm Afterpay Limited. This acquisition signifies Australia’s progress in the BNPL industry. Afterpay’s platform was the focus of the acquisition, which reflects the significant innovation present in Australia’s fintech sector.
Hydrogen fuel is another renewable energy source set to gain ground over the coming years. Currently in Australia, hydrogen is mainly used for industrial processes. Advancements in hydrogen production will be particularly important in helping the manufacturing sector in its decarbonisation efforts. However, hydrogen technology researchers hope that the carbon-intensive transport sector will transition to hydrogen fuel, and that hydrogen fuel may even power homes. Australia is set to be a world leader in using hydrogen to power energy grids, with EnergyAustralia’s Tallawarra B project in New South Wales set to begin using GE Gas Power’s 9F hybrid gas-hydrogen turbines in 2023-24.
Renewable energy is set for a shake-up in Australia. While wind turbines and solar panels are established technologies, the intermittent nature of their energy sources (being wind and the sun) have limited their utility and discouraged greater uptake by end users. However, investment in new and emerging storage technologies is expected to improve renewables’ effectiveness as an alternative to fossil fuels.
Tesla has installed two large-scale lithium-ion batteries in Australia, in South Australia and Victoria. In March 2022, the tech giant won a contract to install a third battery in Queensland. Genex Power Limited is also working on a new storage facility in Queensland. These advancements are good news for Australian battery manufacturers, and lithium and rare earth miners.
Australia’s biotechnology companies have developed a strong reputation in recent years, and the industry looks set to emerge victorious from the COVID-19 pandemic. Following an agreement with the Federal and the Victorian Governments, US-based biotechnology product manufacturer Moderna will establish an mRNA vaccine manufacturing facility in Victoria. The facility will be capable of producing 100 million vaccines a year from 2024.
Advancements in cellular therapy and medicinal cannabis are also anticipated to provide opportunities for the industry to expand. Over 70 registered medicinal cannabis manufacturers and importers are already established in Australia, including Little Green Pharma and ECS Botanics. As medicinal cannabis is now legal in every Australian state and territory, it will likely become more widely accepted and prescribed, which will boost demand and encourage new entrants.
As more business and consumer transactions move online, the need for greater cybersecurity is expected to intensify in 2022 and beyond. As most activity was pushed online during the COVID-19 pandemic, scams, malware attacks and ransomware also spiked. These breaches will likely continue to pose a threat, which will boost demand for IT security consulting services. Furthermore, software publishing and testing industries are set to benefit from more government contracts as Australian citizens’ medical and other personal records become increasingly digitised.
Technology companies are the most common users of artificial intelligence (AI), for analysing data and curating and personalising content for their customers. We use AI every day, through social media algorithms, smart devices like Alexa or Siri, and now also in self-driving cars. However, AI has the potential to achieve much more – and these capabilities are only just being realised.
Machine learning and deep learning AI software will help accelerate the trend towards automation by improving output speed and consistency in machine processes. Automation will also help cut costs and improve businesses’ economies of scale. Retailers can also use AI technology to automate stock control tasks. For example, supermarket giant Coles has announced that it will partner with AI firm RELEX Solutions to automate its replenishment processes for fresh produce and liquor.
As concerns over the environment and climate change continue rising, Australians are looking for more ways to reduce their carbon footprint and lessen their wider environmental impact. The emerging sustainable construction sector seeks to capitalise on these concerns. Sustainable construction firms focus on the materials sourced for building, using sustainably sourced timber, recycled plastics, double-glazed windows and zero-carbon cement. Not only will sustainable construction firms themselves benefit from growing demand, but so will the manufacturers and suppliers of these materials.
Demand for tiny homes, which are classified as residential structures of under 37 square metres, is also projected to rise in the coming years. As demand for these homes rises, so too will demand for prefabricated wooden building manufacturers.
Neobanks are banks that only operate online. They have no physical branches or call centres, and all transactions and interactions are made via an app. Additionally, they are not backed by the Big Four: CBA, Westpac, NAB and ANZ. Neobanks typically market themselves to younger, more tech-savvy consumers. However, their lack of connection to the Big Four is a drawcard. While they still dominate the Australian National and Regional Banking industry, trust in the Big Four has somewhat diminished following the Financial Services Royal Commission.
In 2019, Volt Bank was the first neobank granted a licence in Australia. Since then, many others have emerged, such as Up, Alex, Judo and Tyro. The latter two in particular focus on business banking. Volt, which currently has approximately 8,000 customers, has expanded its reach by partnering with Australian Finance Group. Through this partnership, Volt will provide its Banking-as-a-Service (BaaS) to its 3,000 brokers. BaaS gives third-party service providers access to a banking platform to broaden their service offerings to clients. This service is one of the key advantages neobanks have over their traditional counterparts, and will therefore be crucial to driving growth in the industry going forward.
Livestock farming has come under increased scrutiny in recent years as world governments and governing bodies focus on reducing greenhouse gas emissions. Around 11% of Australia’s total greenhouse gas emissions and 70% of its agriculture emissions come directly from livestock. One proposed solution to cut back on emissions is to engage in mini-livestock farming, particularly edible insect farming. Insects produce far fewer emissions than sheep, cattle or pigs. Moreover, insects are rich in proteins and vitamins, making them an attractive alternative. The industry can also benefit from the 60 native edible insect species in Australia, which provides firms with a unique selling proposition both overseas and domestically.
As digital media disrupts traditional media, digital advertising is disrupting traditional advertising. For some of the population, online platforms have replaced television, newspapers and radio as major news sources. Over the coming years, consumers that have grown up with online media will increase as a share of the total population. Consequently, social media marketing is occupying a rising share of online advertising campaigns.
Social media allows advertising campaigns to be targeted at specific demographics, which boosts their effectiveness. These targeted campaigns have mainly been used in business-to-consumer transactions. However, business-to-business advertising has also become increasingly relevant, as it enables companies to target specific buyers. LinkedIn is the dominant business social media platform, but companies are also likely to use others like Twitter and Instagram.
As social media campaigns become more complex, companies will likely contract out to the Media Buying Agencies industry. Digital media buying, and media planning and strategy services are among the fastest-growing service offerings in the Media Buying industry in 2021-22.
In Summary
These emerging industries are challenging established businesses to change their practices to remain competitive in new environments. While these new industries may not reach a dominant position in the market, many established industries will certainly have to adapt to survive.
